An Indian citizen spending more than 183 days abroad is categorized as a Non-Resident Indian (NRI). However, after having spent a substantial amount of time abroad when this NRI decides to return to India he has to address some pertinent tasks to ensure a smooth transition. This is particularly true when reorganizing and appropriately managing one's financial arrangements.
Related Article: NRI Status Has Been Redefined
Here are some money management tips for NRIs returning to India.
As an NRI, one can operate FCNR (Foreign Currency Non-Resident) accounts, NRE (Non-Resident External Rupee) account or an NRO (Non-Resident Ordinary) account. On returning to India the accounts need to be re-designated as domestic resident accounts. The balance in NRE/FCNR accounts may be transferred to RFC (Resident Foreign Currency) accounts, if desired. FCNR accounts can continue till maturity date and can subsequently be converted to RFC accounts.
These accounts need to be converted immediately when an NRI becomes a resident in India. However, a reasonable grace period is allowed which amounts to being 3 months. If continued, the interest earned on these accounts is taxable.
Related Article: More about NRE/NRO Accounts
Point to be remembered, all records with insurers, mutual funds and depository service providers should be updated in a timely manner.
Given that the financial year in India is from April to March, taxation there needs to be addressed accordingly. It is important to ascertain whether one falls under the ROR (resident and ordinary resident) or the RNOR (Resident but not ordinary resident) category. In the case of the former, worldwide income is taxable and in the case of the latter tax is applicable only on Indian sourced income. FEMA (Foreign Exchange Management Act) governs investments of NRIs and ITA (Income Tax Act) governs Indian taxation regulations.
An NRI returning to India is free to hold, own, transfer or invest in assets situated outside India. However, the provision is only applicable if the asset was acquired when the individual was a resident outside India or the asset was inherited from a person outside India. Tax on global income can be saved for up to 3 FYs under RNOR status. Indian sourced income would still be taxable.
Since the applicable norms of finance to expenses, income and investments will change with the change in country of residence, it is essential to rework and reorganize the financial plan. This has to be worked out in detail, setting long term and short term goals. In fact, it would be wise to set up an integrated investment strategy.
Once you have managed your money wisely, maybe with the added help of a financial planner, you can sit back and enjoy the varied employment and investment opportunities that India has to offer.
As the festival of Diwali, the Festival of Lights, approaches, families and friends worldwide are gearing up to celebrate this joyous occasion. Diwali is not only a time for spiritual significance but also an opportunity to connect with loved ones, near and far. Sending money home during Diwali can be a tricky endeavor, especially with the myriad of special offers available. In this article, we introduce you to a standout offer from the State Bank of India (California). Discover how SBIC's Diwali Remittance Offer can make your festival brighter.Introducing SBIC Diwali Remittance OfferThis Diwali, let your love, happiness, and prosperity reach your loved ones in India through a heartwarming remittance with SBIC. To enhance your celebrations, SBIC is thrilled to extend to you an exclusive exchange rate benefit: send money to India and receive 20 paisa higher than SBIC’s regular base exchange rate! This offer is designed exclusively for the Diwali season, allowing you to make your remittances go even further.Diwali holds a special place in our hearts, symbolizing the triumph of light over darkness. It is a time to illuminate lives, bridge distances, and create beautiful memories. What better way to partake in this joyous occasion than by sending your Diwali Remittance through SBIC?Hurry, Limited Period Offer: Wednesday, November 01 – Thursday, November 16, 2023 Don't miss out on this fantastic opportunity! SBIC's Diwali Remittance Offer is valid for a limited period only. Make sure to seize this chance to send your love and blessings to your family and friends in India.Why SBIC’s Diwali Remittance Offer Stands Out:Exclusive Exchange Rate Benefit: SBIC is offering an exchange rate that is 20 paisa higher than their regular base rate, ensuring you get more value for your money.Trusted Service: State Bank of India (California) is a trusted name in the banking industry, providing reliable and secure money transfer services.Limited Time Offer: This exclusive Diwali offer is valid only from November 01 to November 16, 2023. Act fast to take advantage of this special rate.How to Avail SBIC’s Diwali Remittance Offer with CompareRemit:Navigating through various Diwali offers can be overwhelming, but CompareRemit makes it effortless for you. Use our comparison tool to compare and contrast live rates across multiple money transfer companies. Here's how you can find the best deal for your Diwali Remittance:Visit CompareRemit: Go to www.compareremit.com and enter your details, including the amount you wish to send and the destination country (India).Compare Live Rates: Our platform will instantly provide you with live rates from various remittance companies, including SBIC.Choose the Best Deal: Compare the rates, fees, and delivery options to select the best deal that suits your needs and budget.Send Your Diwali Remittance: Once you've chosen the ideal offer, follow the simple steps to send your Diwali Remittance and make your loved ones' celebrations even more special.Remember, terms and conditions apply, and an account with SBIC is required to send the remittance. For more details, don't hesitate to contact SBIC directly.This Diwali, let your love shine brighter and your blessings travel farther. With SBIC’s exclusive Diwali Remittance Offer and CompareRemit’s user-friendly platform, you can make your celebrations truly unforgettable. Warm wishes for a radiant and prosperous Diwali!
In recent years, the traditional banking sector has seen a significant disruption. Among the most notable and innovative developments in this sector is the emergence of neobanks.But what exactly is a neobank? In this blog post, we will delve into the world of neobanks, exploring what they are, how they differ from traditional banks, and what are the top neobanks in the world and in India.What are Neobanks?The term "neobank" is a portmanteau of "new" and "bank," and it aptly describes the essence of these financial institutions. These new-age banks do not have any physical location as they are entirely digital and provide a range of banking services through a mobile application or website.Various neobanks provide a different array of financial services, including:Checking accountsHigh-yield savings accountsEarly access to paychecksFree peer-to-peer money transfersOverdraft protectionAlternative credit-building optionsTools for financial educationWhat sets them apart from traditional banks is their absence of physical branches and their reliance on cutting-edge technology to provide efficient, user-friendly, and often low-cost financial services.Key Features of NeobanksNeobanks, sometimes referred to as 'challenger banks, place greater emphasis on their mobile apps, but many may still allow their customers to manage their accounts through websites and provide physical debit cards for added convenience. Here are the key features of Neobanks:Digital FirstNeobanks operate exclusively online or through mobile apps. This makes them highly accessible to tech-savvy consumers. This digital-first approach eliminates the need for physical branches and the associated overhead costs.Cost EfficiencyWith reduced overhead, these banks can offer more competitive interest rates on savings accounts and lower fees on services like money transfers and foreign currency exchange.For instance, by switching from a traditional bank with a $15 monthly fee to a neobank with fee-free accounts, you could save $180 annually.Note: Careful go through Neobank's policies, as some may charge fees for premium services or require a minimum number of monthly transactions for higher interest rates. Make sure their offer aligns with your spending patterns and savings objectives before signing up.User-Friendly InterfacesConsidering that neobanks prioritize user experience by offering intuitive and user-friendly interfaces, you can easily perform banking tasks, such as setting up accounts, making transfers, and tracking expenses, all from the convenience of your smartphone.InnovativeUnlike traditional banks, neobanks can adapt quickly to changing market conditions and customer needs. You get access to innovative features and services, such as budgeting tools, investment options, and real-time transaction notifications.Limited Product RangeNeobanks typically focus on core banking services, such as savings and checking accounts, as well as payment solutions. While they may expand their offerings over time, they tend to avoid complex financial products like mortgages or business loans.Collaboration with Traditional BanksSome neobanks partner with traditional banks to provide the underlying infrastructure and regulatory compliance. For example, they ensure the safety of deposits through collaborations with banks insured by the Federal Deposit Insurance Corp (FDIC). This allows neobanks to focus on customer experience and innovation while leveraging the stability and resources of established financial institutions.Data-Driven InsightsThese neobanks harness the power of data analytics to provide personalized financial advice, identify spending patterns, and offer tailored suggestions, empowering users to make informed financial decisions and optimize their money management strategies.Drawbacks of NeobanksWhile neobanks offer many advantages, there are also some challenges to keep in mind:Limited Physical Access: Neobanks do not have physical branches, which may be a drawback for customers who prefer face-to-face interactions or need in-person banking services.Regulatory Hurdles: Neobanks must navigate complex regulatory frameworks. Some neobanks rely on traditional banks for underlying infrastructure and regulatory compliance. This can introduce an additional layer of risk if the partner bank faces issues.Deposit Insurance Variability: While neobanks often partner with insured banks, the level of deposit insurance coverage may vary, potentially impacting the safety of deposits.Limited Account Services: They often do not offer a comprehensive range of banking services. For instance, they may lack the capability to facilitate wire transfers or easily accept cash deposits, and might not include options like certificates of deposit, investment products, or lending services.Dependence on Technology: Neobanks heavily rely on technology, making them susceptible to outages or technical issues that can disrupt services.Risk of Closure: As startups, neobanks can be riskier, and some may struggle to sustain their operations or might be acquired by larger institutions, affecting user experience.How Do Neobanks Make Money?Neobanks primarily generate revenue through:Interchange feesInterest on loans and credit cardsTransaction fees (e.g., bank transfers, ATM withdrawals, money transfers)Subscription fees (offering premium services for a monthly fee, like Chime and Revolut)Foreign ExchangeInvestment servicesThe specific revenue model of a neobank can vary depending on its business strategy, target market, and geographic location.Are Neobanks FDIC Insured?Acquiring a banking charter is a time-consuming process, which is why most neobanks prefer to establish partnerships with traditional banks possessing a valid bank charter, full compliance with necessary regulations, and FDIC insurance.In other words, the traditional bank assumes responsibility for insurance and regulatory matters, while the neobank manages customer service and online access.Neobanks with FDIC insurance coverage can engage in lending, protect deposits, and provide a range of financial services akin to traditional banks.However, a few neobanks operate independently as fully-fledged banks. For example, Varo obtained a national banking charter and secured its own FDIC insurance coverage in 2020.Some neobanks also offer investment opportunities such as stocks and cryptocurrencies, but these forms of investments do not receive the same level of insurance protection as deposits.If you are considering a neobank, check if it is FDIC-insured or operates with a partner bank that holds a bank charter and is FDIC-insured.Neobanks Vs. Online BanksNeobanks and online banks are both financial institutions that offer banking services primarily through digital channels, but there are some key differences between the two.Online banks usually have FDIC insurance, meaning they have their own banking charters and regulatory compliance, without the need for traditional bank partnerships. They also offer a comprehensive suite of banking services such as checking accounts, savings accounts, CDs, investments, and loans.Certain brick-and-mortar banks have online-only divisions that offer a complete range of digital accounts accessible through computer or smartphone apps. These divisions, backed by traditional banks, could be classified as online banks rather than neobanks.Also, many traditional banks offer online access to their regular accounts, but they are not exclusively online. Customers still have access to physical branches, and these accounts often come with monthly fees and lower interest rates.On the other hand, neobanks, born in the digital age, offer a modern, branchless banking experience by leveraging financial technology and focusing on innovation.They cater to tech-savvy customers, often targeting specific niches or demographics and forming partnerships with traditional banks for services like deposit insurance. However, their banking services may be more limited compared to traditional banks.Top NeobanksIn recent years, the neobank industry has seen remarkable expansion, witnessing an influx of new entrants and existing neobanks broadening their services and customer reach.According to a study by Mordor Intelligence, the worldwide neobanks market was valued at USD 18.6 billion in 2020, and it is projected to achieve USD 333.4 billion by 2026, experiencing a substantial compound annual growth rate (CAGR) of 50.6% throughout the forecast period.The rise of neobanks can be largely attributed to the widespread adoption of digital payment methods, which reflects customers' preference for banking solutions that are convenient, secure, straightforward, and readily accessible.Here are the top neobanks that are recognized globally:RevolutEstablished in 2015, Revolut is a major European neobank, boasting over 18 million customers and generating over $1 billion in revenue. Revolut provides a wide array of financial services, including bank accounts, debit cards, currency exchange, stock trading, cryptocurrency, and peer-to-peer payments. Remarkably, it caters to both individuals and businesses, supporting more than 30 currencies. As it expands into the US market, it's on track to become one of the world's largest neobanks.ChimeFounded in 2012 and based in San Francisco, California, Chime partners with an FDIC-insured bank to revolutionize overdraft fees. It offers mobile-first checking accounts, savings accounts, and a Chime Visa Debit Card. Account holders enjoy a competitive APY and are spared from overdraft fees. Chime also grants early access to direct deposits, delivers $200 in fee-free overdraft protection via SpotMe, and extends credit to users who may not qualify for traditional credit cards. This approach helps users avoid overdraft charges, reduce reliance on payday loans, and sidestep credit card debt.VaroVaro Bank, founded in 2015 as Varo Money, earned distinction as the first self-chartered neobank, securing a national bank charter in 2020. Varo offers a checking account, high-yield savings accounts, and up to $100 in interest-free cash advances. It differentiates itself with no credit checks, no minimum balance requirements, and no overdraft fees. Varo Believe, its secured credit card with no fees, enables users to build credit without incurring interest. You also earn cashback, a perk typically reserved for credit cardholders. By providing access to premium financial services, Varo empowers individuals with limited or no credit history to enhance their financial well-being.SoFiFounded in 2011 to assist students in financing their education, SoFi has grown into a prominent neobank, serving more than 5.7 million users. SoFi offers a comprehensive suite of services, encompassing checking and savings accounts, loans, credit cards, investment accounts, and student loan refinancing. In contrast to traditional banks and student loan providers, SoFi aims to support its customers holistically, whether they are at home, work, or school.MonzoEstablished in 2015, Monzo is a UK-based neobank. It introduced its digital banking platform in the United States in 2022. Its notable feature is the absence of foreign transaction fees, including no charges for foreign ATM withdrawals (excluding any fees imposed by the ATM owner). Additional travel-friendly features include real-time transaction alerts and the ability to freeze a lost card. Monzo does not impose monthly or overdraft fees. Monzo provides its accounts through a partnership with Sutton Bank.N26N26 is headquartered in Germany and was established in 2013. It operates in several nations, such as Austria, Estonia, France, Germany, Latvia, the Netherlands, Poland, Spain, Switzerland, the United Kingdom, and others. What sets N26 apart as a neobank are its mobile-centric approach and global availability. Operating in multiple European countries and the US, N26 is an excellent choice for individuals who frequently travel or relocate internationally. It offers services like fee-free checking accounts, budget management tools, and mobile payments.Starling BankStarling Bank is a neobank based in the United Kingdom, which was established in 2014. Among Starling Bank's standout attributes are its real-time notifications, providing customers with immediate updates on their expenditures and account balances. The mobile app offers various budgeting tools, including spending categorization and insights. It also has a range of protective features such as the capability to instantly freeze and unfreeze your card, establish location-based security settings, and activate two-factor authentication.Neobanks in IndiaNeobanks have been making significant inroads in India's rapidly evolving financial landscape. Although relatively a new banking system, neobanks have gained significant favor among both individuals and businesses in India.Here is a list of the top 21 Neobanks in India 2023FininFreoInstantPayJupiterMahila MoneyMoolNiyoFamPayFI MoneyAkudoChqbookDigibankOneCardOpenPaytm BankPiggy NeobankRazorpayXUni CardWalrus ClubZikZukZolveConclusionIn an era characterized by advancements in financial technology and changing consumer preferences, neobanks are redefining the banking industry. Their digital-first approach, cost-efficiency, and commitment to innovation have made them a compelling choice for a growing number of consumers seeking modern, convenient, and affordable banking solutions.As neobanking continues to mature and expand its offerings, they are likely to play an increasingly significant role in the future of finance. However, you should weigh the advantages and drawbacks carefully to determine whether a neobank aligns with their financial needs and preferences.If you're interested in an online banking service to send money internationally, be sure to compare money transfer providers to see offered rates, fees, and more for sending money abroad using CompareRemit today!
Foreign Direct Investment is a scheme by the Government of India to attract and promote foreign investment directly for the industries that need domestic capital to be supplemented and better technology and skills to be infused into the economy of the country to accelerate economic growth. FDI generates more jobs not only in the different sectors in which it is allowed but also in all the associated sectors to those that are allowed. New technologies come into the country, which may or may not include knowledge transfer. This strengthens the country economically as is stated above but also giving individual capital a boost.The government of India revised its foreign direct investment (FDI) norms in the month of June 2016. This has been a path breaking policy change from the past. These changes have made the FDI regime transparent, comprehensive and easy to comprehend. Many industries have been opened up and the feeling is that the non resident investing back in India is most welcome. More so like making it feel like a home coming for the expatriates, who yearn to give back something to their motherland. Non Resident Indians have been included as eligible investors, for the purpose of the FDI Rules and Regulations. There is a list of legal entities which have been mentioned as eligible investees.They are:Indian CompaniesPartnership Firms and Proprietary ConcernsTrustsLimited Liability Companies (LLPs)Investment VehiclesThere are two routes for the same, one being the Automatic Route and the second being the Government Route. In the sectors under automatic route, the foreign entities do not have to seek prior approval from the government but have to inform the Reserve Bank of India (RBI the Indian Regulator) regarding the amount of investment within a specified timeline. Under the government route, the foreign entities have to seek prior approval from the government. This government department is the Foreign Investment Promotion Board (FIPB). The FDI policy limits for different sectors is not uniform.FIPB is a board formed by serving government servants of the level of secretary and constitutes many sub-boards for different sectors. The FIPB reports directly to the Cabinet Committee of economic affairs under the Union Cabinet of the Government of India, which is chaired by the Prime Minister of India. The FIPB has authority to deal with investments up to INR 5000 crores or 50 Billion INR or the US $ 800 million. Anything above this amount goes directly to the cabinet for approval. FIPB has to refer the same to the Union Cabinet.There are cases which would not need fresh approval, if the foreign entity intends to bring in fresh capital into the invested company, provided the same had been approved within the norms before. There could be cases when a certain business activity would have required government approval, in the past, but under the current norms, it has been classified under the automatic route, then also no fresh approval is needed. Also if the overall investment cap has been increased, and then the fresh funds are infused into the business, and now the upper limit of such investment cap has been increased, then also no fresh approval is required.FIPB has facilitated electronic filing of the applications, amendments to applications on their website.Prohibited SectorsLottery Business including Government/private lottery, online lotteries, etc.Gambling and Betting including casinos etc.Chit fundsNidhi companyTrading in Transferable Development Rights (TDRs)Real Estate Business or Construction of Farm Houses (Real estate business does not include the development of townships, construction of residential /commercial premises, roads or bridges)Manufacturing of cigars, cheroots, cigarillos, and cigarettes, of tobacco or of tobacco substitutesActivities/sectors not open to private sector investment e.g. Atomic Energy and Railway operations (other than permitted activities)There could be foreign technology collaborations as well and that would qualify under the FDI norms. This includes licensing for franchises, trademarks, brand name and management contracts is also prohibited under the lottery business and gambling & betting activities.