PASSIVE INCOME

Usually, an Indian goes abroad for higher studies or work and gradually goes through a settlement process where he is on student visas or work permits/visas first, then may acquire residence permits/permanent resident cards eventually perhaps to a citizenship of this new country. Overall, this process could easily be 10-12 years, give and take a few years here and there.

However, nothing is guaranteed and over this long duration. New jobs may need be found, new moves made and life started afresh at times. Without waxing philosophically about it, the practicality of the situation demands that at least as long as one is an Indian citizen, he should keep an eye on his investments in India and set up some passive sources of income, which can come in handy whenever he needs to return to India. These passive income sources may well be used in other forms too, such as providing for parents or relatives back home or for expenditure during periodic home trips to India.

While the purposes of setting up passive income in India may differ, the financial instruments to do so are similar. Based on one’s interest, understanding and risk-appetite these financial instruments may range from simple fixed or term deposits, to mutual funds or direct stock purchase, to property purchase for rental income and myriad others.

One should be rather clear about his purpose and understand his risk appetite, and thus, chose an investment means accordingly. Having said that, and not wishing to elaborate more on the above points, I now list different investments that I hold in India.

  1. Some cash in savings account in my banks in India that I use via net banking for paying for expenses such as train or flight tickets within India, internet-based shopping purchases, or just plain cash withdrawals from ATM for expenses during India trip.
  • Simple fixed deposits/term deposits, with option for automatic renewal, to let the interest be accrued on money lying around. Here, I chose options of special term deposits implying the interest generated would be re-invested too, thus, letting compounding effects take over a period of time. However, I also have the usual term deposits where the interest is deposited back in my savings account, which then provides me some handy cash for my next visit to India.
  • I have also recently created FCNR deposits in USD. This way, I can generate better interest on the money in my bank in India than in my local bank (abroad). The interest generated is tax free in India. However, it is also easy to remit out/transfer back this money to my current country, as and when the need may arise. The reason to deposit in USD and not convert to INR and then do a fixed deposit is to avoid currency devaluation risk. If I convert this money to INR and open a fixed deposit in INR it will give me a better interest rate (7% approx.). However, if and when I need to get this money back to my resident country as USD, there is a risk that the exchange rate is higher than it is now and I lose out money in this re-conversion from INR back to USD. Although, this is unpredictable and depends on state of economy, geopolitics and what not, we are going by historical trends here as an indicator that INR has lowered in comparison to USD, over the years.

With internet banking, the fixed deposits/term deposits can be easily opened by oneself. For FCNR deposit, it needs some special instructions (not to convert money to INR) and coordination with bank – relationship manager or home branch. I have covered this topic of FCNR in details in a special section of its own, including how to open this FCNR account at different banks.

Compound Interest Calculator:

https://www.investor.gov/financial-tools-calculators/calculators/compound-interest-calculator

SBI Investment Deposits:

https://sbi.co.in/web/personal-banking/investments-deposits/deposits

SBI Term Deposit:

https://sbi.co.in/web/personal-banking/investments-deposits/deposits/fixed-deposit

SBI Special Term Deposit:

https://sbi.co.in/web/personal-banking/investments-deposits/deposits/reinvestment-plan

SBI PPF:

https://sbi.co.in/web/personal-banking/investments-deposits/govt-schemes/ppf

HDFC Fixed Deposits:

https://www.hdfcbank.com/personal/save/deposits/fixed-deposit

DBS India Fixed Deposits:

https://www.dbs.com/in/treasures/nri-banking/deposits/nri-fixed-deposits/fd-interest-rates

INR to USD:

https://www.xe.com/currencycharts/?from=USD&to=INR&view=10Y

SENDING MONEY TO INDIA

For transferring money to India, I have used the following three methods:

  1. direct international payment/transfer from my local bank to Indian bank accounts

I have sent money to my accounts in India quite a few times, transferred as local currency but deposited in INR in India, as per the exchange rate and transaction fees. I did this remittance by both my local bank directly and also through Wise (I first set up the desired INR transfer in Wise and then deposited the required amount in local currency from my local bank to Wise account).

I have also used their cards for payments in India. Specifically, for a recent trip to India, I ordered a physical debit card from Wise. Then, I added money into my Wise account. Thus, I could use this Wise debit card account for withdrawals from local ATMs and payments at merchant counters. For withdrawals from SBI ATMs I was not charged any additional fees (I withdrew a few times). However, when withdrawing from ICICI ATM they charged me INR 200 fees for withdrawing money using another bank’s card (I think the amount I had withdrawn in total was INR 8000).

For sending money to India in USD for opening FCNR account at DBS, using Wise, I could transfer in USD to my NRE account with DBS in India. I was in touch with my Relationship Manager for this deposit and he was well aware of the USD remittance. Thus, when DBS team sighted the money in their Nostro account, they handled it as per the request to create an FCNR deposit in USD (and did not convert USD into INR).

However, for sending money to India in USD for opening FCNR account at SBI, SBI NRI team advised me to indicate this in the columns 70 & 72 of SWIFT transfer form – “FCNR REP / FCNB REP / DO NOT CONVERT – FOR OPENING FCNR”. I checked with Wise if they could do so, however, they said they couldn’t. My local bank said they can, I need to provide this information under “Instructions”. Revolut also could do so, and in their form, I could write this out in the “Reference” field. This was told to me by someone who had done similar transaction recently using Revolut and hence, I did not check directly with Revolut team.

Thus, I used Revolut for the USD transfer for FCNR account and in “Reference” filed, typed in: “FCNR REP / FCNB REP / DO NOT CONVERT – FOR OPENING FCNR”. Later, I could see in their transaction receipt for Transfer Confirmation, the same was written out in field “:70:” under SWIFT Credit Instructions MT103. Importantly, the transferred amount went as USD to SBI, it was not converted to INR, and FCNR USD account was successfully opened.

Further Information:

MT103 and its fields:

https://en.wikipedia.org/wiki/MT103

What is MT103?

https://wise.com/us/blog/what-is-mt103-swift

MT103 Fields (SWIFT)

https://trackmyswift.com/swift/mt103-fields-(swift)

FCNR (B) ACCOUNT/ DEPOSIT

FCNR stands for Foreign Currency Non-Resident deposit, which is a way non-resident Indians can term deposit/fixed deposit foreign currency but in Indian banks. Seemingly, the list of currencies in which these deposits can be made has changed over the years, as well as the interest rates given on these. However, USD and Euro have been amongst the constantly available currency choices. On maturity, the principle and interest are provided in the same foreign currency as of the initial deposit.

DBS Treasures India: I transferred money in USD using Wise. I was in touch with my relationship manager who kept a look out for these funds and when sighted in their Nostro account, did the needful to create an FCNR deposit in USD. Note that an NRE account is needed to open an FCNR deposit.

SBI: NRE account is not needed for FCNR (only if you want the proceeds credited after maturity).

I tried to send USD1000 to my SBI NRO account to open a FCNR(B) deposit as per procedure mentioned here: https://sbi.co.in/web/nri/accounts/fcnrb-account For the “inward remittance disposal advise” form in SBI net-banking, these instructions go directly to home branch and they have to deal with it; if they are somehow not well-versed or knowledgeable on these matters, there is a risk that money gets converted to INR.

Despite two attempts, both my inward remittances were returned back to me. I had also indicated via SBI internet banking regarding each of these remittances for “Inward Remittance Disposal Request”. Further, I also instructed through this form to deduct my NRO account for creating an FCNR(B) deposit. This also did not work out. I was not sure what the problem was since there was no message or guidance related to these rejected inward remittances or NRO deduction attempts to create an FCNR(B) account. Thus, eventually I contacted the NRI team and followed their advice as mentioned below.

The recommendation is to fill the form (found in link below) and send to NRI team along with SWIFT deposit receipt. They will create the FCNR deposit and it will show in netbanking. This form can be sent as scanned copy of the form over SBI account registered email along with the SWIFT transaction receipt. Additionally, I filled DA-1 nomination form to provide a nominee for this FCNR deposit.

Further, SBI wants SWIFT transfer with instructions – “FCNR REP/ FCNB REP/ DO NOT CONVERT – FOR OPENING FCNR” – in column 70 & 72 of the form to avoid any conversion risk. I corresponded with Wise and they can not provide any such instructions that SBI wants in the transfer. Thus, I used Revolut and used SBI Swift code – SBININBBXXX

Further Information:

SBI NRI team:

leads.nri@sbi.co.in

Global NRI Centre

State Bank of India

Panampilly Nagar

Ernakulam, Kerala-682036

Phone: +91-484-2796700/705/718/719

WhatsApp Number: +91 9072727332

Website: https://bank.sbi/portal/web/nri/home

DBS Treasures India:

https://www.dbs.com/in/treasures/nri-banking/deposits/fcnr-deposit-account

SBI FCNR (B) account opening form – “NRE / NRO / FCNR (B) / RFC account opening application for NRIs / PIOs / OCIs”:

https://bank.sbi/web/nri/accounts/download-forms

Click to access SBI_NRI_Account_Opening_Application.pdf

SBI “Request for Nomination in the account (Form DA -1)”:

https://bank.sbi/web/nri/accounts/download-forms

Click to access NRI_7.pdf

SBI “Download Nominee Nomination Forms”:

https://retail.onlinesbi.sbi/npersonal/reg_forms.html

NON-RESIDENT EXTERNAL (NRE) ACCOUNT

A Non-Resident External (NRE) account is to transfer your foreign income and hold as INR in India. From here it can be channelized into other investments. The income earned from deposits in NRE account is tax free and can be easily repatriated back to your bank account in your resident country. However, you lose some money in transaction fees and there is always a risk of currency devaluation chipping away some of the gains made through investments in India, e.g., interest earned on fixed or term deposits held in NRE accounts may seem higher in INR terms but after transfer back into your resident country currency the real rate of return may be lower given currency exchange rate fluctuations.

I have NRE accounts in DBS Treasures India and HDFC.

DBS Treasures India: I had filled up a single account opening form in which I also indicated for an NRE account. The details of the process I followed for this are mentioned under the section “NON-RESIDENT ORDINARY (NRO) ACCOUNT”. I received the Welcome Kit at my residence. It has a debit card that I used to log into “digibank by DBS India” app.   

HDFC: I contacted HDFC (links below), filled the NRE account opening form and signed it. Plus, I prepared the supporting documents, which I self-attested. HDFC arranged for a one-time courier pick up through which I sent an envelope containing the account opening form and supporting documents to their NRI account opening team in Mumbai.

Further Information:

What is NRE account

https://www.hdfcbank.com/personal/resources/learning-centre/save/know-what-is-nre-account-and-its-benefits

https://www.dbs.com/in/treasures/articles/nri-hub/live-enriched/what-is-nre-account-meaning

https://sbi.co.in/web/nri/accounts/non-residential-external

SBI, open NRE account:

https://oaa.onlinesbi.sbi/oaonri/onlineaccapp.htm

HDFC, open NRE account:

https://www.hdfcbank.com/nri-banking/save/nri-accounts/savings-account/nre-savings-account

HDFC NRE account opening form:

Click to access 723fb80a-2dde-42a3-9793-7ae1be57c87f

HDFC NRE account apply online:

https://www.hdfcbank.com/nri-banking/save/nri-accounts/savings-account

DBS Treasures India – open NRE account:

https://www.dbs.com/in/treasures/nri-banking/nri-accounts/savings-accounts/nre-savings-account

NON-RESIDENT ORDINARY (NRO) ACCOUNT

As a Non-Resident Indian (NRI), if you already happened to have a bank account in India when residing in India, you have to re-designate its status from residential to non-residential. The so-called Non-Resident Ordinary (NRO) account then is used to manage all your existing deposits, investments, income accrued within India such as from interests earned on deposits, dividends received, sales proceeds etc. “Within India” is the key differentiating term here for the NRO account.

For the purpose of re-designating your existing India bank accounts to Non-Resident Ordinary (NRO) account, relevant once you have moved out of India and are working/living abroad, you can fill up the relevant forms (links below in Further Information) and send to your banks with supporting documents. How to do this differs from bank to bank and I mention below the ones where I had direct, hands-on experience of doing so and only talking about what I had done myself for this process of re-designation of my residential bank account to Non-Resident Ordinary (NRO) account with a given bank. Please note that there may be alternate ways, e.g. attestation of documents can be done by Indian embassy or consulate, as is mentioned in the form of SBI, but I don’t write about it when sharing what I actually did myself simply that’s not what I did for my case.

State Bank of India (SBI):

For SBI, I filled up the form for re-designation of resident to non-resident ordinary (NRO) account (link below in Further Information), got my supporting documents (passport copy, work permit/visa copy, etc.) attested by a “notary public” and sent the documents by post to my SBI home branch. The account was re-designated as NRO in due time and it reflected so in internet banking too. For example, some options not applicable for non-residents, e.g., under Payments/Transfers -> International Funds Transfer -> Foreign Currency Transfer/Remittance, do not show up for me when clicked after logging into my account online.

Briefly:

– filled and signed resident to non-resident ordinary (NRO) account conversion form

– got supporting documents attested by “notary public”

– posted the filled and signed form and notary attested supporting documents to my SBI home branch

HDFC India (HDFC):

I had a resident bank account at HDFC that needed re-designation to non-resident. For this, I contacted HDFC via their NRI contact form (link below), and got a call back and email from them. I sent a signed scanned copy of the filled Resident account to Non-resident account conversion form (link below) on their email address – nriaccount.opening@hdfcbank.com – along with scanned copies of self-attested supporting documents, i.e., self-signed with date. The account was re-designated to NRO status in due time.

– filled and signed resident to non-resident ordinary (NRO) account conversion form

– self-attested supporting documents

– emailed scanned copies of the filled and signed form and self-attested supporting documents to HDFC at their designated email ID nriaccount.opening@hdfcbank.com

DBS Treasures India (DBS):

I contacted DBS India via their Treasures website. They sent me on email the non-resident account opening form to fill, which I provided a physical copy of at one of their branches in India (since I happened to be visiting), along with copies of supporting documents that I signed in front of the bank officer, after showing original of each document. The account was opened in due time, after some on-boarding step, which I did via virtual telecon after my return from India.

Briefly:

– filled a new non-resident account opening form

– made copies of supporting documents

– provided the filed form and supporting documents in person, showed the originals for verification and signed the form and supporting documents in presence of a bank officer

Further Information:

NRE & NRO Accounts – Meaning, Comparison, Benefits, Taxation

https://cleartax.in/s/nre-nro-accounts

SBI forms – please use from listed under “Service requests for existing accounts” – “Purpose: For converting resident Indian savings bank account into NRO savings bank account on change of residential status”

https://bank.sbi/web/nri/accounts/download-forms  “Click here” should take you to a PDF form

Click to access RI_to_NRO_SB_Form.pdf

SBI all forms

https://retail.onlinesbi.sbi/npersonal/reg_forms.html

SBI NRI forms

https://bank.sbi/web/nri/accounts/download-forms

“International funds transfer facility through internet banking is only for resident Indian savings bank account holders only. “

https://retail.onlinesbi.sbi/sbijava/retail/html/sbi_outward.html

HDFC NRI CONTACT FORM

https://leads.hdfcbank.com/applications/webforms/apply/HDFC_NR_PAF_LeadForm/index.aspx

HDFC RESIDENT TO NRO CONVERSION PROCESS

https://www.hdfcbank.com/nri-banking/resident-to-nro-conversion-process

HDFC RESIDENT ACCOUNT TO NRO ACCOUNT CONVERSION FORM

Click to access 723fb80a-2dde-42a3-9793-7ae1be57c87f

DBS NRO account opening:

https://www.dbs.com/in/treasures/nri-banking/nri-accounts/savings-accounts/nro-savings-account

DBS Treasures – contact form:

https://www.dbs.com/in/treasures/dbs-forms/nri_account_opening_india.page

MOTIVATION

When trying to perform certain actions and transactions with my banks in India, as a Non-Resident Indian (NRI), I spent a lot of time and energy reading information on websites, exchanging emails or discussing on phone calls with the concerned banks, to figure out the correct set of steps to accomplish some procedure.

What I rather preferred was to talk to some other NRI who had done the same thing himself and could tell me the needed steps to accomplish it. To the best of my efforts, I couldn’t find such information on the internet.

Thus, after having finally figured out some Indian banking and investing related options for myself as a Non-Resident Indian (NRI), I thought to share this practical, hands-on advice with other NRIs through this website. What I am writing here is what I have actually done myself, thus it should work well for you too. For this same reason then, I don’t talk about things where I don’t have any practical experience. Thus, the notes here are restricted to my direct dealing as an NRI with a few Indian banks where I have accounts (and does not talk about those where I have none).

Succinctly, here what you will find is:

  • practical, self-done stuff that worked out for me after some trials and errors, in consultation with the banks concerned
  • not copy-paste information from other sources, which may not be fully clear or may not work out completely

The hope is that if you as a Non-Resident Indian (NRI) have to do similar operational or financial transactions with your banks in India, it goes smoothly for you and saves your time and effort, and minimises your frustrations.

Hope you find the contents here useful. I have strived to keep the language simple and understandable, devoid of the technical (and precise) wordings, with an aim to enhance comprehension towards getting things done. 

And, wish you All the Best!