Foreign exchange management act
Querist :
Anonymous
(Querist) 03 August 2025
This query is : Resolved
As I understand an NRI or OCI and an Indian Resident cannot have a joint INR account with a Bank in India even if they are close relatives. If two persons have such an account what is the penalty on punishment?
kavksatyanarayana
(Expert) 03 August 2025
To open these accounts, an NRI/Person of Indian Origin (PIO)/Overseas Citizen of India (OCI) is required as per the prevailing Foreign Exchange Management Act (FEMA) regulations.prohibits any person resident in India from acquiring, holding, owning, possessing, or transferring any foreign exchange, foreign security, or immovable property situated outside India. It prohibits unless explicitly permitted by FEMA or the Reserve Bank of India (RBI). This regulation aims to control and manage foreign exchange transactions within India.
Querist :
Anonymous
(Querist) 04 August 2025
The above section does not say anything about an Indian Resident holding a Rupee account with any bank jointly with a Non-resident or an Overseas citizen of India. I watched in you-tube an expert saying that a Resident and a Non-Resident or an OCI cannot hold a joint rupee account with any bank in India. I wanted to know what is the punishment or penalty if such a joint account is held.
T. Kalaiselvan, Advocate
(Expert) 04 August 2025
NRIs can open joint accounts with other NRIs or a resident. In case, a resident must be made a joint account holder, the Mode of Operation has to be ‘Former or Survivor’ and only one resident can be added as a joint account holder. Joint accounts can also be opened with other NRIs (maximum 4 are permitted) with Mode of Operation as ‘Either or Survivor’, Jointly, or Minor Under Guardian.
Querist :
Anonymous
(Querist) 04 August 2025
Thank you Adv. Kalaiselvan. (1) In the case of a Former or Survivor account, can cheques received in the name of the Latter (other than Former) be credited to the account? (2) Can payments to the Latter be received by NEFT/NECS? (3) Can similar FD accounts also be opened? (4) Does a Former or Survivor mean that the Latter also can withdraw from the account? (5) Last but not the least what is the prescribed punishment or penalty if any of the rules is violated?
T. Kalaiselvan, Advocate
(Expert) 04 August 2025
1. If it is a joint account, it can very well be deposited into the account for collection, though the cheque was issued in favor of one of the account holders.
2. Whether the payment was transferred by NEFT/NECS or any other mode, it ws transferred to the same joint account, hence what is your question about it?
3. The FCNR is a fixed deposit account operable on an individual or joint basis. For joint accounts, you can choose a resident Indian or an NRI.
4. Under Either or Survivor: The account has two account holders – a primary and a secondary holder. Either or both can operate the account.
Under former or survivor: Only the primary account holder can operate the account. The secondary account holder can access it only after the primary holder’s demise.
If it is to be operated jointly: All transactions require approval and signatures from all account holders. If one account holder passes away, the account becomes inoperable, and the balance is transferred to the surviving holder.
5. The rules are violated then the violator will be held for legal consequences as per law that would be applicable to the situation.
Querist :
Anonymous
(Querist) 06 August 2025
I think that penalty is not exactly for opening an account in violation of FEMA but for using the account in violation of FEMA. In other words, if such an account is opened but not actually used in violation of FEMA there can be no penalty. Only the account will be closed. Presumably under the existing Rules under FEMA or that of the RBI in furtherance of FEMA, if a joint account between an NRI and an RI is opened, the account has to be with the NRI as Former (Primary) and the RI as Latter(Survivor). At least it is that way banks are allowing accounts. Such an arrangement is ideal for havala transactions. The Former NRI holder who has foreign exchange can pay abroad on behalf the Latter(RI)/Survivor and the Latter RI can deposit an equivalent amount in the joint account. If the intention is to prevent havala transaction, the RI should be Former holder who can pay from the account and the NRI should be Latter(Survivor) holder. The present Rules appear Tuglakian.
T. Kalaiselvan, Advocate
(Expert) 07 August 2025
If you know the law better than anyone you could have taken a decision as per your knowledge instead of posting various questions here in this forum and posting answers to them by your own interpretation of the law of the land and finally passing sarcastic comments about Indian law. You may proceed as per your own thoughts because there's no point in wasting our time to give answers to your hypothetical questions.
Querist :
Anonymous
(Querist) 07 August 2025
Kalaiselvan Sir I knew about the law from you only. I am thankful to you for the same. My comments are not against you. My statements was that the law as it stands now doesn't serve the intended purpose of preventing violation of FEMA. Actually it serves the opposite.
T. Kalaiselvan, Advocate
(Expert) 08 August 2025
Without knowing your background details on the subject matter, any opinion rendered may turn out to be a misguidance, hence you may better consider consulting an advocate of your choice either from this website or outside personally to get more clarity on what exactly you seek opinion, this would protect yor privacy too.
Dr. J C Vashista
(Expert) 10 August 2025
It would be better to consult a chartered account.
