I am an NRI for the past 30 years setling back India. Returned one and half month back. What are the statutory guidelines to be followed for my 1. NRE account 2. NRE deposits 3. NRO account 4. NRO deposits. I want to put my money in fds for max duration at the current interest rates. Please advice the best way to implement.

Ans: The status of FY2020-21 would be NRI and the status in FY2021-22 would be RNOR (Resident but not ordinarily resident). So you need to convert the NRE to resident account immediately after returning to India. If you fail to convert your NRE account within 3 months of the return, it will be considered as a violation of Foreign Exchange Management Act (FEMA) and attract a penalty.

After you return to India, any interest earned on NRE account will be taxable. You can opt to transfer your funds from NRE account to RFC account upon return

Though there are no specific products for returning NRIs, there are a whole range of investment options available for you apart from Bank Deposits. The most common are mutual funds, bonds, stocks, insurance, etc. You can choose to invest based on factors that suit you including risk, return, liquidity, etc. Options like PPF that are not available for NRIs become available when your status changes to Resident Indian.

Ans: We can't express our opinion on the basis of incomplete info provided.
Please confirm, which NRI Account you have opened with Indian Bank ?
Is it NRE Account, NRO Account, FCNR Account or RFC Account. Conditions/ Restrictions are different in all these accounts.
However, best is to consult your bank to find out solution to your problem.
Most welcome for any further clarifications. Thanks.

Ans: Dear Sir,

Thank you for sharing your situation. Since you are now a Non-Resident Indian (NRI) living in New Zealand, there are specific regulatory and compliance requirements under RBI and SEBI that you should follow regarding your Indian bank and demat accounts. Here’s a breakdown of your options and recommendations:

1. Convert Existing Accounts to NRI Status

Savings Account: HDFC Bank allows you to convert resident savings accounts to NRO/NRE accounts.

NRO Account: Can hold Indian income (rental, dividends, interest). Repatriation is limited to USD 1 million per financial year.

NRE Account: Can repatriate funds freely, but only for money sourced from abroad.

Demat Accounts: SEBI regulations require resident demat accounts to be re-designated as NRI demat accounts when your residential status changes.

Contact Zerodha and Religare to complete KYC update with NRI documents and PAN, along with your overseas address.

Ensure funds/stocks are transferred to NRO/NRE linked accounts as per SEBI guidelines.

Pros: Compliant with RBI/SEBI rules, minimal hassle, no need to close accounts.

2. Close Demat Accounts, Convert Bank Account, Open New NRI Demat Accounts

You can liquidate existing demat holdings, transfer funds to your bank, convert to NRO/NRE account, and open new NRI demat accounts.

Cons:

Selling stocks may trigger capital gains tax (short/long-term CG depending on holding period).

Potential loss of market gains during transition.

3. Gift Funds to Mother/Brother, Then Repatriate Back Later

While gifting to close relatives is allowed under Indian law, funds sent back to you from India as a gift may raise tax and compliance issues.

For amounts above ?50,000, proper gift deed documentation is required, and banks will need declaration forms.

Not recommended for compliance simplicity.

4. Recommended Approach

Best Practice:

Convert your existing bank account to NRO (for existing INR holdings) or open NRE account (if you plan to remit funds from NZ).

Update your demat accounts as NRI accounts without liquidating holdings. Both Zerodha and Religare can guide the conversion process.

Ensure all future transactions are done via NRO/NRE accounts, to remain fully compliant with FEMA, RBI, and SEBI norms.

Additional Notes:

Repatriation rules: NRO → USD 1M/year; NRE → fully repatriable.

Tax filing: As an NRI, you are required to file Indian income tax returns for Indian-sourced income (dividends, interest, capital gains).

Summary:

Avoid selling or gifting funds unnecessarily.

Convert your resident bank and demat accounts to NRO/NRI status for seamless compliance.

Maintain proper documentation for RBI and SEBI, and coordinate with your brokers and bank.

Best regards,
Naveenn Kummar, BE, MBA, QPFP
Chief Financial Planner | AMFI Registered MFD
https://members.networkfp.com/member/naveenkumarreddy-vadula-chennai