Editorial: 6 reasons why RBI’s extended deadline will not help most NRIs

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After several weeks of confusion and thousands of distress calls from Non-resident Indians (NRIs), Reserve Bank of India on Saturday announced that NRIs can exchange old Rs 500 and Rs 1000 notes till June 30, 2017.

The announcement came as a relief to many NRIs who possess demonetised currencies of Rs 500 and Rs 1000 with them. However detailed explanation of the RBI requirements reveal that the extension will not be helpful to majority of NRIs abroad.

Here are the reasons:

1. Facility only in 5 RBI offices

Unlike what many social media messages claim, the exchange facility for NRIs is not available in regular banks and all RBI offices. If you approach your regular bank with demonetised currencies, you will be disappointed.

  • The extended exchange facility for NRIs will be available ONLY through Reserve Bank offices at Mumbai, New Delhi, Chennai, Kolkata, and Nagpur.

It has to be noted that Reserve Bank of India has offices at 31 locations all over India (see the map below), but only 5 regional offices have been selected to open this window.

RBI Office

RBI Office Locations in India (Image: RBI website)

Obviously it will not be feasible for people from distant places or other states to visit these cities, just to exchange Rs 25,000 or less.

While states like Kerala, which has millions of NRIs living abroad, has two RBI offices, none of them provide this exchange facility.

As a matter of fact, someone who lives in Trivandrum (which already has an RBI office) will need to travel at least 1500km (return travel to nearest RBI office in Chennai) and spend thousands of Rupees to exchange his own money.

2. Only notes brought from abroad can be deposited

If you are carrying demonetised currency to India, a declaration form with the number of notes and total amount has to be filled and submitted to Customs Official at airport. The official will issue a certificate or stamp on the declaration form and the same has to be submitted along with other documents to RBI offices.

While the intention here is to control unaccounted money, sadly many NRIs would lose value for the money they had kept in lockers & vaults in India – even if it is accounted and earned through proper channels.

3. Only Rs 25,000 allowed for NRIs

The RBI circular says that there will be no monetary limit for exchange for eligible Indian citizens who were abroad for short period.

However, deposits from NRIs will be subject to the relevant Foreign Exchange laws, which limits it to Rs 25,000 only.

So if you have more than Rs 25,000 with you, the maximum you can deposit is Rs 25,000 and the rest become valueless – even if the source is legal.

Third party tender is not allowed, which means you cannot authorize someone to exchange. In case a husband and wife carries Rs 50,000 to India, both of them will have to travel all the way to RBI office and stand in queue to exchange the currency.

4. Too many documents required

Here are the documents required for exchange of currency at RBI office (as stated in RBI website)

  1. A Copy of Passport with immigration stamp as proof of the individual’s absence from the country during the period November 9, 2016 to December 30, 2016.
  2. Passport in original should be presented at the RBI counter for verification.
  3. A certificate issued by Indian Customs on arrival through Red Channel indicating the import of SBNs, with details and value thereof.
  4. Copies of statements of all bank accounts in India evidencing that no SBNs were deposited during November 10, 2016 to December 30, 2016.
  5. Requisite document as per provisions of Section 114B of IT Rules, 1962.

While requirements 1, 2 & 3 are reasonable, we do not understand the logic behind “statements of all bank accounts in India evidencing that no SBNs were deposited during the period”.

With document 1, the person is already proving that he was out of country for last 7 weeks. Only NRO accounts were allowed to accept deposits of SBN and that too with authorization letter. So why statement from all bank accounts?

By showing the Customs certificate, you are already proving that the money was brought from abroad.

  • If an NRI already had some money in India and he deposited it to NRO account (by authorizing someone else) why is he being prohibited from depositing more money he had abroad?
  • While no such restrictions applied for resident Indians, how does RBI assume that NRIs will not have more than Rs 25,000 (white money) with them?

5. Why PAN card if the amount goes to KYC-compliant account?

Even though PAN card and Aadhaar Card are recently being promoted as mandatory requirements for many transactions, the big question is how many NRIs have got them.

According to RBI circular, requisite document as per provisions of Section 114B of IT Rules, 1962 are required to be submitted.  Section 114B of Income Tax Rules is about PAN card as a requirement for depositing Rs 50,000 to bank accounts.

If the limit allowed to NRIs is only Rs 25,000 and the amount is being directly deposited only to KYC-compliant bank accounts, that too upon showing an original Passport, why the requirement for PAN Card?

6. Is six months enough for everyone?

The RBI has extended the deadline to 30 June, 2017 which is a good move. But is it good enough for all?

Considering that average return-ticket rates from most countries is more than Rs 25,000, no one will travel to India to get Rs 25,000 exchanged. The only option is to exchange during holiday visit.

Most NRIs, especially families, visit India during July-September as it coincides with school vacation and festival season. Even in 2017, the school vacations in GCC is expected to start around last week of June. And then there are many more, especially in US, UK etc, who don’t visit every year.

So with the deadline being 30 June, how many people would be able to make use of this facility?

Can’t we do it in a better way?

We understand that some suggestions like exchanging currency a Indian Missions abroad or allowing foreign banks to exchange are not feasible. However, being the apex financial body in India, RBI should have come up with a more practical and simpler facility for NRIs who contribute billions of dollars to Indian economy every year.

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It would have helped millions of people if regular banks were allowed to collect demonetised currencies through NRO accounts – of course after producing the necessary documents.

With dynamic leaders like Sushma Swaraj heading Ministry of External Affairs, NRIs are still optimistic that the regulations will be reframed and their currency woes will be answered.


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- Published on 4 January 2017

46 Comments

  1. GUIDELINES NOT HELPFUL FOR NRIs at all
    Does not help someone without NRO account (as no exchange is allowed), only deposit into NRO is allowed
    Waste of money and time, to travel and deposit 25000 or less (I have only half that amount)
    To open new account, need PAN card etc and that takes anywhere from 2-6 weeks.
    Only few RBI offices , so expect long lines and inefficiency
    At the end of the day, would get peanuts in return for money deposited(considering at least 5-6 times the money spent on travel,stay , meals etc) not counting leave taken from work

    SUGGESTIONS
    Allow local indian consulates to accept old notes upto 25000 after confirming identity etc and give new notes (or a check which could be exchanged at local foreign currency offices),The sack of old notes may then be sent to RBI in India
    Allow local indian banks to do the same
    Please do not require deposit in NRO account as precondition because many of us NRIs do not have any such account and do not intend to open one

  2. Though Rs. 25000 Max has been mentioned in the RBI notification itself, it is explained that the admissability of amount is limited by what AMOUNT were TAKEN OUT as per existing FEMA rules.
    So even though technically one NRI is permitted to take in 25000 by customs ar airport, when it is presented to RBI, it can say that the person who resides in USA came and returned last time in 2013
    and then only 10,000 was permitted to be taken out by one person, and in the absence of any rule that even the joint account holder can not bring in his wife.s money brought in 2015 from India,
    but, only 1000 would be credited to NRO and balance put in Garbage bin!!
    The question is why all this rules simply complicating and making people who are honest to tell lies just to put in account your hard earned money legally held by you? Special counters for senior citizens has been offerred and instructions not to harass them once the people are with in RBI, but what about harassing them outside?(merely one counter with 3-4 chairs with a board SENIOR CITIZENs/NRIs!
    will not serve the real purpose if intention is honest!

    I think, indian administration takes everybody as thieves asking everybody to prove that he is honest in every such silly things.This is apolitical,and is in the Indian blood due to our past history!
    Who will pay USD 1000 plus just for tickets to India from Americas and spend on other personal expenses which becomes un avoidable due to a trip and convert USD 350 to avoid illegality of holding in another country?????

  3. Could the editor confirm if foreign citizens holding OCI (Overseas Citizen of India) cards be considered as NRI’S.

    Can husband and wife take Rupees 50,00.00 to India and deposit it in their NRO joint account?
    THE last visit to India being 2014 and 2015 ( Jointly on one occasion and only spouse on one occasion)

    Can an Indian holding a foreign passport and not having a OCI card or NRO account in India take money back to India and exchange the same at RBI?

  4. Also note the latest update to the FAQs on the RBI website that says that it is not available for OCI/PIO:
    6. Is the facility available to Overseas Citizens of India (OCI)/Persons of Indian Origin (PIO)?
    No, the facility is not available to OCIs/PIOs.

  5. Dear Raj, As per RBI website, this facility is not available for PIO and OCI. Only Indian passport holders can avail this.

  6. Many NRIs who were actually OCI, but having NRO accounts in India who visited from Nov 10th and returned after X-Mas and New year have credited their holdings of Old Notes in India in their accounts. I think like how salaried class is taught Income tax act by
    applying every complication on one side and make business class andAgricultural class
    let free,now that the Govt of India is flush with Funds forgot NRI contribution when
    the govt.Did not have Foreign exchange for one weeks consumption in 1990s!
    Let the OCI treat what ever Indian Rupees they had as COLLECTABLES from a foregone era!!

  7. The option the government/RBI has given to NRIs for exchanging/depositing old currency is virtually impossible to make use of for most NRIs. What a slap on NRIs who hold legitimate Indian old currency.

  8. If the objective of demonetization exercise is, according to Indian Ministry of Finance, to curb the terrorist activities, suppress of black money and get rid of counterfeit Indian currency notes. Then, what gain is there to penalize the Overseas Citizen of India? (OCIs)

    The OCIs travel to India after exchanging their hard earned cash for Indian Rupee so that they can spend their time with their parents and other relatives. They also purchase Indian products and also pay for various services in India. Whatever the balance of the Indian currency, they usually take with them, with the hope of using them in their next visit to India.

    This is where the Ministry of Finance is being quite unfair, as they are allowing NRIs who are Citizen of India the privilege to Deposit the old currency and not for OCIs.

    The statistic that finally will indicate the total value of the old currency that has been deposited to the bank will not be accurate, as there would be quite a large sum in the hands of the OCIs that are actually, that are genuine Rupees (not held by terrorist, nor is it black money or counterfeit).

    Only problem is that Overseas Citizen of India are not allowed to deposit or exchange them.

    Can someone find out why they are doing this?

  9. When somebody says large sums of money is struck with NRIs and OCis it does not mean that individuals have large stock of such cash.The sheer number of NRIs and OCIs abroad are more than the population of a Medium Indian state.Of course some business establishments(legal and not official may have accumulated such cash,say Money changers,Jwellers, but that is Business risk.But the OCIs were permitted to carry notes out officially (unlike many communist countries where even taking their coin outside their country as a memento/ sovenner is not allowed),with even an enhancement of such limts from June 2014/Dec 2015! Now branding their cash ineligible actually confuses them,one even emotionally as they are branded holding some contraband in Indian customs,making them enter RED CHANNEL first! Second even if the money value is something BEARABLE TO MANY OCIs,
    what to do with such notes,just to burn them like Govt.burning contraband like ivory?
    The effect of this let down is far reaching, especially for the young generation.The much publicised
    long tern vision of TOTAL CONVERTIBILITY of INDIAN RUPEE will be having no takers from abroad,OCI or Foreign citizens totally! Similar is the benefits of taking OCI by spending on the procedure, instead of going for a long term visa from embassy! Third area is the issue of Dual citizenship! All these will lose its emotional value by this token loss of just a few thousands of Re notes now held by many educated promising OCIs, whose deposits in NRO and NRE/FCNR are welcome to India but ehy are made to run away from taking even 25000 Rupees during their next exit from India!!

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