How NRIs can open NPS account in India?
Few days back RBI has issued notification that NRIs can open NPS account in India with certain guidelines. The NPS has been a good retirement option for everyone. However, only resident Indian’s were supposed to open NPS account. With recent guidelines, now Non-Resident Indian (NRI’s) can open the NPS account in India. What are the guidelines where NRIs can open NPS account in India ? What is the step-by-step process for NRI’s to open New Pension Scheme (NPS) in India?
Recent RBI guidelines for NRI’s to open NPS in India
RBI has, after consultation with the Government of India, through a notification, made it clear that NRI’s can invest in the National Pension Scheme (managed by the PFRDA) by following guidelines and eligibility standards, under the Foreign Exchange Management Scheme. RBI mentioned that opening this option of investment for NRI’s will help them to save and invest for retirement needs and is a good option for NRI’s looking forward to come back to the country. Below are the guidelines issued by RBI.
- NPS account should be opened by NRI’s who are in the age of 18-60 years.
- Such individuals should have to comply KYC norms.
- Initial amount of subscription to be paid for the NPS account activation has to be paid by the NRI only through inward remittance through the normal banking channels or through the amount held by them in their foreign currency non-repatriable (FCRT) account, non-resident ordinary (NRO) account, non resident external (NRE) account.
- Either RBI or any other regulatory body imposes no restriction over the repatriation of the accumulated amount.
Where NRI’s can open NPS account in India?
The authorized entities for opening up the NPS account are called as Points of Presence (POP’s). Almost all the banks, public bank and private banks and many other financial organizations are entitled to be the POP’s and hence are eligible to operate the NPS accounts with them.
Some of the POP’s are as listed below:
- Allahabad Bank
- Axis Bank
- Bajaj Allianz General Insurance Co
- Central Bank of India
- Citibank N.A.
- Computer Age Management Services Private
- ICICI Bank
- IDBI Bank
- IL&FS Securities Services
- Kotak Mahindra Bank
- Life Insurance Corporation of India
- Oriental Bank of Commerce Reliance Capital
- State Bank of Bikaner & Jaipur
- State Bank of Hyderabad
- State Bank of India
- State Bank of Indore
- State Bank of Mysore
- State Bank of Patiala
- State Bank of Travancore
- The South Indian Bank
- Union Bank of India
- UTI Asset Management Company
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Step-by-step process on how NRIs can open NPS account
- Visit NPS Trust website, NSDL website, PFRDA website or from your bank website and Download the “NRI NPS form”.
- Duly fill the NRI NPS account opening form and sign it.
- NRI needs to submit the account opening form to POC along with relevant documents like copy of passport, overseas address and contact details and permanent address in India.
- After the form is submitted, the NPS account subscription amount needs to be paid to the POP. The initial amount to be deposited for Tier 1 account is Rs 500 and that for Tier 2 account is Rs 1000.
- Once the bank or POC verifies the documents, a 12 digit unique PRAN number (Permanent Retirement Account Number) will be allocated by CRA (Central Record keeping Agency).
- Once this PRAN number is generated, it will be sent to NRIs by SMS and Email alert for all future transactions.
- Once these formalities are completed and contribution is deposited the account becomes operational.
- The NSDL is authorized for record keeping, administration and customer services of the NPS account holders and is called as the Central Record keeping Agency (CRA). Within 15 days of the account getting opened, CRA, issues a 12 digit code called as the Permanent Retirement Account Number (PRAN) which remains same for the lifetime and this unique code is the identification code of the NPS account and can be used from anywhere in the country.
- Along with the PRAN, the CRA sends the information brochure, the internet access pin and the telephone access pin at the registered address and the applicant receives an email and a message over the details mentioned in the form.
What are Tier-1 and Tier-2 Accounts in NPS?
Tier 1 Account: It is a mandatory, non withdrawable, account meant for the future retirement Savings and can be used for withdrawing money only by process of exit from the NPS account. R
The amount invested in the Tier-1 account is eligible for income tax deduction up to Rs 50,000 beyond Rs 1.5 Lakhs of 80C.
Tier 2 Account: It is a saving account that comes up as a compliment with the Tier 1 account. It is voluntarily maintained, saving the facility and not mandatory to be opened and maintained by the NPS account holder. The money can be withdrawn from this Account at any point of time and no tax benefits are available on sum saved in this account.
What documents NRI needs to submit to open an NPS account in India?
NRI wishing to open NPS account has to submit the following documents to the POP:
- Duly completely filled in registration/application form.
- An Identity proof of the individual.
- An Address proof of Indian address and address proof outside India, where he or she are staying.
- Age / Birth date proof.
- Colored passport size photographs.
NOTE: If the address of residence mentioned in the application form is same as that in the identity proof, then the identity proof can well be accepted as the address proof. If the address mentioned in the application document happens to be different from the current place of residence, then a separate address proof is required for documentation completion.
Any restriction on repatriation of amount invested by NRIs in NPS account?
RBI had clearly stated in the notification issued for the opening of NPS accounts by NRI’s that there is no restriction on the repatriation of the amount saved in the NPS account.
Highlights of New Pension Scheme (NPS)
Following are the key highlights of NPS.
- NPS can be opened for accumulating funds for retirement.
- One can invest in NPS funds where they yielded up to 14% returns in the last few years.
- One can invest as low as Rs 500 per year.
- One can invest up to Rs 50,000 in the Tier-1 account to get income tax benefit beyond 80C of Rs 1.5 Lakhs.
- The NPS account can be used from anywhere in the country and moreover can be swapped internally from one POS to other POS easily and the amount can be deposited at any POS or POS-SP. Such facilities make this account totally portable.
- The amount and the number of depositions can be changed as per the account holder’s needs and so this is a salient feature of the account.
- It is the scheme which has the lowest charges.
- This scheme offers a choice to the subscribers as to where they wish to invest money in i.e. equity, debt etc.
Conclusion: NPS is a good retirement savings scheme as it offers good security of the future. It has a combination of debt and equity in its investment portfolio and so offers a stable future with the security of the fund. The amount that will be generated at the end depends on the fund type, duration of the fund and the sum invested. Hence NPS is a very efficient, beneficial and low cost retirement saving schemes wherein NRI’s can invest. This is one of the best investment Plans for NRIs who are looking forward to resort back to India during retirement.
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How NRIs can open NPS account in India