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.
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)
- 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.
- Passport in original should be presented at the RBI counter for verification.
- A certificate issued by Indian Customs on arrival through Red Channel indicating the import of SBNs, with details and value thereof.
- Copies of statements of all bank accounts in India evidencing that no SBNs were deposited during November 10, 2016 to December 30, 2016.
- 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.
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.
- 2017 Guide: How NRIs can change their old 500 and 1000 Rupee notes
- Travel Guide: How much currency can you carry to India?
- Travel Alert: NRIs need to show old notes to Customs, Fill declaration
- Published on 4 January 2017