Can NRI’s open HUF Bank account?

POSTED BY manish ON November 11, 2013 7:01 pm COMMENTS (17)

I am an NRI and had contacted Central Bank of India reg opening  of HUF account but the Manager declined to open the account saying “According to our Bank’s practice HUF accounts are not opened for NRI. Please be guided accordingly”.

Please note that I am the Karta and including me all members of HUF are NON-RESIDENTS. Is it possible for someone to pls provide the RBI circular or any such govt notice so that I can again go the branch with this info. I tried searching for this on RBI website myself but could not get it.  I hope someone could help me with relevant info.

17 replies on this article “Can NRI’s open HUF Bank account?”

  1. KSRP says:

    HUF is a concept applicable within India only. The concept of HUF is not prevalent outside India. Therefore, nobody can form a HUF in UK, UAE or USA or in any other country and seek to open a HUF account in India. NRO account can be opened for HUF. This much is conceded by RBI in the Master Circular for NRO accounts. But there is no mention of NRE account for HUF.
    RBI has not so far come out with any specific guideline stating that NRE account can be opened for HUF. Non Resident status is for each individual and not for group of people who may be part of a HUF, although all of them are from the same HUF in India.

    Better take up the matter with RBI and ensure that a guideline either to open the account or not to open the account is extracted from RBI in clear cut terms (not the usual ambigbious beating around useless clarification normally RBI churns out).

    1. Thanks for your comment KSRP

  2. forry71 says:

    Hi I am also looking to open an NRE HUF account. Can someone please guide me on whcih bank is willing to open this kind of account.

  3. ashalanshu says:

    Dear Jram, from the discussion, a workable solution. First open the NRE account or NRO account in HDFC. Later on contact the PSU bank of your choice with this bank account and you ‘ll get what you want. The PSU bank officers are playing safe by refusing you to open the account. rules wise, you are permitted to operate.

    thanks

    Ashal

  4. jram says:

    Dear Sir, I had also already contacted HDFC and as you said and they are more than happy to open both HUF NRE and NRO. However, I was looking for a PSU bank. Are you aware of anyone having HUF accounts with NRI status with a PSU bank? Also, I was curious to know if I in my ‘individual capacity’ gift money to my family NRO HUF a/c (after its opened!!), will the interest earned on the a/c be clubbed to my income or NRO HUF’s income (for Indian tax purposes)? Incase, if it will be clubbed, can it be given as interest free loan to this is not possible?

    1. CA Karan Batra says:

      Very few people in India know about the concept of HUF… So you may face some hurdles from PSU Banks… But if you provide them with all relevant details – they may open it…

      My suggestion is that you should try contacting SBI…. There are chances that they may have faced such a situation earlier and would be knowing about the same..

      1. jram says:

        Dear Sir, I had earlier contacted a Regional Manager of Bank of Baroda and SBI through one of my contacts and both had mentioned that I need to apply for special permission from RBI and it cannot be opened through automatic route. Also, would you like to take my earlier question on clubbing provisions vis-a-vis Indian IT?

        1. CA Karan Batra says:

          As per Section 64(2), clubbing provisions would apply and the interest earned would be included in your total income…

          Even if you give an interest free loan, it is clearly evident that the purpose of giving such a loan is to avoid payment of taxes and the income tax officer can apply clubbing provisions in this case as well…

          The principle of “Substance over Form” would be applied in this case…

  5. CA Karan Batra says:

    Refer Pt. No 38 on this link – http://www.icicibank.com/ebor/nri-banking/faqs/index.html

    It says – “With maturity proceeds of FCNR Deposits of HUF”

    This question clearly indicates that HUF’s can open FCNR Deposits and that is why this question came up…

  6. CA Karan Batra says:

    This link very clearly states that NRI’s can open NRO/NRE/FCNR Accounts – http://www.rbi.org.in/scripts/FAQView.aspx?Id=52#F1

    Just a clarification that NRI does not mean Non Resident Individual but it means Non-Resident Indian…

    Your HUF is a Non Resident Indian and can open NRO/NRE/FCNR Accounts… This link nowhere states that its only for Individuals… It is applicable for all NRI’s including HUF’s

  7. CA Karan Batra says:

    In that case try contacting SBI…
    Central Bank is a very small bank and may not have seen such a case in the past…

    I’m of a firm opinion that you would be allowed to open NRO/NRE Accounts… I’m still searching for more info on the same…

    Many banks like ICICI & HDFC also have a good customer support team for NRI’s … With Dollar rates having gone up, many banks are now targeting NRI’s…

    Irrespective of whether you open a HUF bank account with these private banks or not, you can always get info from them on how to open NRI HUF Bank Account…

  8. jram says:

    Thanks Sir for the reply. But the bank wants me to provide some form of relevant documentation – from any competent authority vis-a-vis RBI/IT/court orders/likewise which clearly clarifies that NRI’s are eligible to open both HUF NRE and HUF NRO. They say they have never handled such a situation before.

  9. CA Karan Batra says:

    Dear Jram

    I tried searching for any RBI Notification on this but couldn’t find anything…

    However, I would like to tell you one thing that in your case as all the members of the HUF are Non-Residents, the status of the HUF would also be considered as Non-Resident in India as its control and management of its affairs is outside India [Section 6(2) of Income Tax]

    So maybe you can check if your HUF is eligible to open NRI Bank Accounts like FCNR/NRE/NRO Accounts…

    But one thing is clear, that your HUF is Non-Resident in India and is 100% Legal as per law… So there would certainly be a way to open a bank account for such a HUF…

    There is no point allowing NRI’s to create a HUF without giving them permission to open a Bank Account… Opening of a Bank account would certainly be allowed… You only have to check which type of bank accounts are allowed…

    I’m trying to search for more details on this query… Will post it here in case I find anything relevant…

  10. jram says:

    Thanks Manish.. I have trying to do this for the last ten days – but pushed to the wall with no answers. I had contacted the branch manager, regional manager, and AGM and all have no specific answers. It would be helpful to know if NRI can open NRE and NRO a/c and supporting with relevant documentation – from any competent authority vis-a-vis RBI/IT/court orders/likewise.

    1. But you asked for HUF only ? Right ? I contacted one CA and he is searching for answer . NRI can surely open NRE and NRO , who else will ? I have asked the CA to answer only if NRI can open HUF or not ?

      Manish

      1. jram says:

        Yes Manish, HUF NRE and NRO bank account

  11. Let me ask a CA for the answer . I dont know it myself !

    manish

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Download Our FREE Ebook!

Available only for first 100 people today

Download Our FREE Ebook!

Available only for first 100 people today