NRI Nominee Can Inherit Your Money, But Can They Take It Abroad? Know the FEMA Rules

NRI inheritance and remittance rules An NRI nominee may be able to repatriate inherited money abroad, but the process is subject to the Foreign Exchange Management Act (FEMA) and prescribed banking procedures.

An NRI nominee may also be able to repatriate inherited money abroad, but the process is subject to the Foreign Exchange Management Act (FEMA) and prescribed banking procedures.

Can an NRI be appointed as a nominee?

Yes. An NRI can be validly appointed as a nominee for a resident Indian’s bank deposit, mutual fund folio, or insurance policy.

Rohit Jain, Managing Partner, Singhania & Co., said, “Yes. An NRI may validly be appointed nominee for a resident Indian’s bank deposit, mutual-fund folio or insurance policy.”

According to Jain, legally, neither non-resident status nor an overseas address constitutes a general disqualification. The Reserve Bank of India’s (RBI) Master Direction on Deposits and Accounts authorises nomination for individual deposit accounts, while SEBI’s nomination framework permits nomination without imposing a residency condition.

Similarly, under Section 39 of the Insurance Act, 1938, an individual can nominate another person, including an NRI.

However, investors should understand an important distinction — being a nominee does not necessarily mean becoming the ultimate legal owner of the asset.

Jain said, “It may be understood that as per law, a nominee is only a custodian of the proceeds, and it would not override testamentary or intestate succession.”

This means nomination should not be treated as a substitute for proper estate planning or a valid Will. Investors should ensure that their nomination details and succession documents are consistent with their wishes.

Can an NRI nominee take the inherited money abroad?

An NRI nominee may be able to repatriate inherited money abroad, but the process is subject to the Foreign Exchange Management Act (FEMA) and prescribed banking procedures.

Jain said, “Yes, subject to FEMA.”

An NRI may route inherited rupee assets or sale-redemption proceeds through an NRO account and instruct one Authorised Dealer Category-I bank to remit up to $1 million per financial year. This can include transfer to the nominee’s NRE or SNRR (Special Non-Resident Rupee) account, subject to the required documentation.

The bank will ordinarily require documents such as the death certificate, nomination or succession evidence, asset statements, proof of inheritance and realisation, PAN and KYC documents. The nominee may also need to provide the prescribed undertaking confirming legitimate NRO receivables, along with evidence that Indian taxes have been paid or provided for.

Applicable Form 15CA, including Part D for non-chargeable remittances, and Form 15CB or an Assessing Officer certificate where statutorily required, must also be furnished.

For remittances exceeding the annual ceiling, prior RBI approval is required.

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