Non-Resident Indian (NRI) – An NRI is a person who is still a citizen of India but lives in a foreign country.
Overseas Citizen of India (OCI) – It is given to a person who was eligible to be an Indian National anytime from 26th January, 1950 or belonged to a territory that became a part of India after 15th August, 1947. This person’s children and grandchildren are eligible to register as OCIs
Earlier there was a Person of Indian Origin (PIO) card which is now discontinued. Anyone with a PIO card will be treated as an OCI.
Check – wiseNRI.com for NRI Financial Planning
Effect of demonetisation on NRIs
The effects of demonetisation were felt not only by those residing in India but also by Indians abroad. They had some money on their hands in terms of the banned currency notes. Some had money in bank accounts. Let us have a look at the demonetisation rules for OCIs and NRIs.
The Reserve Bank of India (RBI) has allowed NRIs to deposit cash in denominations of Rs. 500 and Rs. 1000 up to June 30, 2017. But an NRI can deposit only up to Rs. 25,000. He cannot deposit money more than this amount even if the source of income is legal.
Check – NRI DTAA Rules
NRIs coming to India will have to fill up a declaration form and show the currency notes that they have to the customs officials. The customs officials will stamp the declaration. This stamped declaration along with other documents like original passport, passport copy, bank account statements, PAN and other documentary evidence will have to be submitted to RBI along with the money.
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Moreover, the deposit can be done only in the RBI offices in Mumbai, Chennai, Delhi, Kolkata and Nagpur and not in any other RBI office. RBI will then transfer the money into the person’s account. It may not be practical for all NRIs to travel within this time frame for depositing money.
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This might also be cumbersome for NRIs living in other parts of the country like Kerala or Andhra Pradesh who may not have to arrive in these cities (where the deposit is possible) to go to their hometown. They have to unnecessarily travel to deposit money which is not even a huge sum.
These rules and facilities are available only to NRIs and not to people who are classified under ‘OCI’. They are also not applicable to NRIs in Nepal, Bhutan, Pakistan and Bangladesh.
Check –NRI Tax Deducted at Source
People (OCI, people of Indian origin and citizens of other countries) who are not residing in India and live in a foreign country (except Pakistan and Bangladesh) cannot hold Indian currency above Rs. 25,000. The government may be following the logic that this is not a big sum and has chosen to ignore it for now. Maybe the government has plans to deal with this money later on once the effects of demonetisation in the country are settled.
But people with OCI status and even foreign tourists who regularly travel to India for vacation and official purposes may have money in the form of these notes and will find it difficult to accept that their money has no value now. Many are disappointed that their circumstances are not being considered for no fault of theirs.
The holding, transfer, and receipt of demonetised currency notes are a punishable offense. Therefore it is important to not deal with these demonetised notes.
If you are an NRI, please share how demonetisation affected you or someone you know.