If you are going to be a Non Resident Indian (NRI) soon due to a shift in jobs or any other reason, there are some formalities you need to complete. Apart for dealing with the emotional stress of leaving your friends and family behind, you also need to settle some official and financial matters. Making arrangements for your finances is imperative before you leave the country.
NRE and NRO accounts
First, you need to change your savings bank account to an NRO or NRE account. The NRO account is for depositing all your income from India. The incomes can come from rent and interests earned. If you need to pay EMIs then you can issue cheque from the country you are in at present. However, there are some restrictions when you try to transfer the money to the country you are located in at present. All the income from India can be transferred to you only if it is less than $1 million per year.
The NRE account can be opened with foreign money. There is no restriction of upper limit but the interest rates are low. Opening these accounts is simple and you must have one such account before you leave.
You cannot use your existing demat account once you become an NRI. You have to open a new NRO demat account. Once you are an NRI, your investment amount in Indian company shares will be restricted. Thus, you need the new demat account to carry out transactions. Opening this demat account is easy and your demat account service provider will guide you. If you ever come back to India for good, you can close this demat account.
Power of attorney
You need someone trusted to manage all your transactions within India and for this, you need to give him, or her, the power of attorney. It is always better for you to choose a family member to act on your behalf. You can always restrict the power entrusted by choosing specific transactions they are authorized to carry out.
You must submit updated KYC forms to the bank, insurance company and mutual fund house where you have your investments. Update your status as an NRI and the institutes will help you with all the new procedures you will need to follow.