Punjab National Bank (PNB) and Oriental Bank of Commerce (OBC) have revised interest rates on foreign currency non-resident (banks) deposit scheme with effect from December 1 this year.

For both these banks, the interest rates on US dollar deposits for maturity of one year to less than two year stands reduced from 3.89 per cent to 3.71 per cent.

In the case of British pound deposits, for maturity of one year to less than two years, the interest rate has been reduced to 5.30 per cent from 5.4 per cent. For euro deposits with maturity of one year to less than two years, the interest rate has been increased from 3.86 per cent to 3.94 per cent. Interest rates have been reduced for other maturities as well in respect of US dollar, Canadian dollar, Australian dollar, euro and British pound deposits.

Meanwhile, OBC said that it has revised upwards the interest rates on exchange earners’ foreign currency (EEFC) deposits

-Business Standard

Non-resident Indians in Canada and United Kingdom can get all information regarding account operations through ‘Post Box Service’ without incurring any courier charges.

Centurion Bank of Punjab has launched ‘Post Box Service’ in the two countries for NRI customers who can use the service to send documents, statement and cheque requisition, account instructions, electronic banking application form, mandate application form, change of address form, PIN re-generation, debit card re-issue or any other account operating instructions including FD opening or renewal instruction.

The service will be provided free of charge, said a press release from the bank. The documents should be sealed thoroughly and sent through ordinary inland postal service in the above countries. New NRI customers can also send account opening form and attested documents. The service cannot be used for sending cheque, demand draft, cash or any other monetary instrument, said the release.

If you are a Non-Resident Indian (NRI) or an immigrant working overseas and have an account with a bank in India, be careful. Without your knowledge, the nature of your existing account might be changed, allowing access to others.Khilaswari Kidwai, an Indian migrant, who lives in the United Arab Emirates opened a Non-Resident Emigrant (NRE) account with the Lucknow branch of the HDFC Bank in 2002. The speciality of this account is that while money can be deposited from any country, it can be withdrawn only in India.

A few months ago, Kidwai transferred his account to Barabanki, after the bank opened its branch there.

However, when Kidwai visited India last month, he came to know that his existing NRE account was changed into a Non-Resident Ordinary (NRO) account. In case of a NRO account, money can be deposited and withdrawn from any country at any time.

Kidwai had lodged FIRs in this regard at the Kotwali police station of Barabanki on November 16. One FIR has been lodged against Lucknow branch officials and another under Sections 419 (cheating by personation) and 420 (cheating and dishonesty including delivery of property) of the IPC.

His FIR states, “I went to check my account balance and was surprised to find that the account was changed without my knowledge. I approached senior bank officials both in Barabanki and Lucknow. After a number of visits, they informed me that it was a small error and assured me that the matter will be investigated.”

Kidwai also fears that the account might have been used for anti-social activities.

Kidwai has now returned to UAE, but before leaving, he had met meet Barabanki SP Praveen Kumar and insisted the case to be transferred to Economic Offence Wing.

Sanjiv Kumar, HDFC Zonal Head, UP and Uttarakhand, said, “We have given our reply to the police and a departmental probe is in progress. The Barabanki branch head has been put under temporary suspension and we hope to complete the probe in the next 15 days,” said Barabanki SP said, “The bank has provided us some documents. Investigation into the case is our top priority.”

Market regulator Sebi on 20 December decided to permit all classes of investors — institutional and retail — to sell shares without owning them at the time of trade.“The stock exchanges would issue the necessary guidelines in this regard and will put in place systems to operationalise the mechanism of short-selling,” Sebi said in a circular here.

However, the system of “naked short selling” as is available in the US markets has not been allowed, and all investors must honour their obligation of delivering the securities at the time of settlement.

In order to provide for a mechanism for borrowing of securities to enable settlement of securities that are sold short, Sebi has decided to implement a full-fledged securities lending and borrowing scheme for market participants. Stock exchanges would issue guidelines in this respect as well.

Sebi advised stock exchanges and depositories to put necessary systems in place to distinguish between the lending and borrowing transactions executed for short selling from the normal market transactions in the demat system. The market regulator will intimate date of implementing short-selling later.

While retail investors were already allowed to short-sell, the decision to include institutional investors is likely to encourage these players in the stock market.

Sebi’s decision to allow short-selling and come out with broad framework in this direction is good for the market as it would create more liquidity, brokerage firm SMC Global vice-president Rajesh Jain said. Stock markets should welcome the news tomorrow, if global cues are also positive, he said.

As per the broad framework for short-selling issued by Sebi, no institutional investor would be allowed in day trading, which means squaring-off transactions intra-day.

Institutional investors would disclose in advance at the time of placement of order whether the transaction is a short sale. However, retail investors would be permitted to make similar disclosure by the end of the trading hours.

Securities in the futures and options segment will be eligible for short-selling and Sebi may review the list of stocks eligible for such transactions from time to time.

Brokers will be asked to collect the details on scrip-wise short sell positions, collate the data and upload it to the stock exchanges before the commencement of trading on the following trading day. The stock exchange would then consolidate such information and disseminate them on their websites for the information of the public on a weekly basis.

For short-selling, a scheme of lending and borrowing securities is essential. To begin with, this borrowing and lending programme would be operated through clearing corporation, and clearing house of stock exchanges having nation-wide terminals who will be registered as Approved Intermediaries (AIs).

Initially, the securities traded in F&O segment would be eligible for lending and borrowing under the scheme. To start with, contracts with tenure of seven trading days may be direct agreement between the lender and the borrower, Sebi said.

Foreign currency non-resident (FCNR) deposits, which are foreign currency denominated deposits, have seen a slowdown due to the appreciating rupee.

This, coupled with the softening interest rates, has led to money from non-resident Indians going to areas like real estate and equity, say bankers.

As per the Report on Trend and Progress of Banking in India 2006-07, released last month, in the period April-September 2006, there was inflow of Rs 5,589 crore in the non-resident foreign currency repatriable fixed deposits.

The total outstanding non-resident foreign currency repatriable fixed deposits was Rs 67,108 crore as on March 30, 2007. But the period April-September 2007, saw an outflow of Rs 5,959 crore, from the total non-resident foreign currency repatriable fixed deposits. This means that between April and September 2007, NRIs have repatriated or sent out money from their accounts in India.

In the last one year, the rupee has appreciated by about 12 per cent against the US dollar.

Most banks issue FCNR deposits in currencies such as the dollar, pound, euro, yen, Canadian dollar and Australian dollar. As the interest rates on FCNR deposits are regulated by the RBI, banks cannot offer high rates. It is currently 75 basis points below the corresponding LIBOR.

These deposits are attractive to NRIs as there is no tax deduction at source and they can avail themselves of loans against these deposits.

“Lower deposit rates combined with the appreciation of the rupee have led to money going to other investment avenues like stock market and real estate. So, although there are inflows, not much remains in bank accounts,” said M.V. Venugopalan, Chairman and CEO, Federal Bank. The Kerala-based bank has a large share of NRI customers.

According to Manish Misra, General Manager and Head-NRI Services and Global Remittances, ICICI Bank, the appreciating rupee has had some impact. “Though in absolute terms there is no decline in deposits, may be in percentage terms there has been a slowdown. NRIs have been putting money in investment avenues like real estate and equity, because of the performance of these sectors,” he said.

Harpreet Singh, Business Director (Wealth Management, Distribution and Loans), Centurion Bank of Punjab, also agreed that there has been a slowdown in FCNR deposits in the last few months. “The interest rate differential is not much as the RBI policy does not encourage very high rates. In our experience lot of NRI customers have diverted funds into real estate, though not much to equity,” he said.

In order to start an NRI relationship with the bank, you will need to produce the following documents that will evidence proof of your Non-Resident status

• Passport with a valid Visa
• Date of exit from India, and date of last entry into India (to establish you have been out for at least 6 months) stamped on passport
• Completed NRE / NRO account opening form.
• Photograph (signed across the face of it)
• Letter from Employer / Contract (proof of overseas employment)
• Letter of rejoining employer / Next Contract (proof of continuation of NRI status)

You may also want to avail of our NRI services if you are a Person of Indian Origin (PIO). You are a PIO if you, any of your parents, or any of your grandparents at any time were a permanent citizen of undivided India. If you are of Non-Indian origin or parentage, and are married to a PIO, an NRI, or an Indian citizen, you are still deemed to be a PIO, and can avail of all facilities available to NRIs.

In order to prove PIO status, you will have to furnish appropriate proof.

The following can be accepted as “Proof of Indian Origin”

• Indian Passport
• Foreign Passport with place of birth in India.- School / College / University leaving certificate or Marksheet
  The above may have to be supported by any one of the following:
  • Certification from the Indian Embassy that the applicant is of Indian origin
  • Ration Card, Voter ID or PAN Card
  • In the case of spouse the Marriage Certificate with supporting evidence of the maiden name
• Foreign Passport with place of birth outside India or not showing a place of birth
  This will have to be supported by any one of the following:
  • Birth Certificate of parents / grandparents substantiating evidence of the relationship
  • School / College / University leaving certificate or mark sheets of the account holder / Parents or Grandparents with supporting evidence of the relationship
  • Passport of either Parents or Grandparents, which indicate that they were Indian citizens with supporting evidence of the relationship
  • Certification from the Indian Embassy that the applicant or either of his parents or grandparents are of Indian origin with supporting evidence of the relationship
  • Ration Card, Voter ID or PAN card of either self or parents / grandparents with supporting evidence of the relationship
  • Old Indian Passport
  • PIO Card
  • Marriage certificate with supporting evidence of the maiden Indian name substantiated by any of the above documents.

  The NRI Representative/ Officer accepting the application form from the customer must provide a certification that states “NRI Status Verified” together with the relevant copies of any of the above documents to prove PIO.