ANon-Resident Indian(NRI) is a

citizen of India
who holds an Indian passportand
has temporarilyemigratedto another
country
for six months or more for employment,
residence, education or any other purpose.
Note that NRI for the purpose of bank
accounts is asdefined under FEMA.
 Non-Resident Indian (NRI) from income tax act angel
Strictly speaking, the termnon-residentrefers only to the
tax statusof a person who,
as per section 6 of the Income-tax Act of 1961,
has not resided in India for a specified period
for the purposes of the Income Tax Act.
The rates of income tax are different for persons who are
"resident in India" and for NRIs.
For the purposes of the Income Tax Act, "residence in India"
requires stay in India of at least 182 days in a calendar year
or 365 days spread out over four consecutive years.
According to the act, any Indian citizen who does not meet the
criteria as a "resident of India" is a non-resident of India and is
treated as NRI for paying income tax.
 Person of Indian Origin (PIO)
Government of India considers anyone of Indian origin up to four
generations.
removed to be a PIO, with the exception of those who were ever nationals
ofAfghanistan,Bangladesh,Bhutan,Nepal,Pakistan, orSri Lanka.
The prohibited list periodically includes China andIranas well.
The spouse of a PIO can also be issued a PIO card though the spouse might
not be a PIO.
This latter category includes foreign spouses of Indian nationals, regardless
of ethnic origin,
so long as they were not born in, or ever nationals of, the aforementioned
prohibited countries.
PIO Cards exempt holders from many restrictions that apply to foreign
nationals, such as visa andwork permitrequirements, along with certain
other economic limitations.
 Ordinary Non-Resident Rupee Accounts (NRO
Accounts)
These are Rupee denominated non-repatriable accounts
and can be in the form of savings, current recurring or fixed
deposits.
These accounts can be opened jointly with residents in
India.
When an Indian National / PIO resident in India leaves for
taking up employment, etc. outside the country,
his bank account in India gets designated as NRO account.
 The deposits can be used to make all legitimate
payments in rupees.
Interest income, from NRO accounts is taxable.
Interest income, net of taxes is repatriable.
NRO account can be funded through any of the
following sources:
By proceeds of foreign exchange remittance from
abroad through banking channels in an approved
manner
By proceeds of foreign currency notes and traveler
cheques brought into India by the non-resident while on
 Conditions regarding repatriation of balances in NRO
accounts:
Repatriation is allowed up to US dollars 1 million per
calendar year for any purpose from the balances in
NRO accounts subject to payment of applicable taxes
Limit of US dollars 1 million includes sale proceeds of
immovable properties held by NRIs / PIOs for a period
of 10 years
In case a property is sold after being held for less than
10 years, remittance can be made if the sale proceeds
have been held by the NRI/PIO for the balance period
 Non-Resident (External) Rupee Accounts (NRE
Accounts)
NRIs, PIOs, OCBs are eligible to open NRE Accounts.
These are rupee denominated accounts and can be in
the form of
savings, current, recurring or fixed deposit accounts.
Accounts can be opened by remittance of funds in free
foreign exchange.
Foreign exchange brought in legally, repatriable incomes
of the account holder, etc.can be credited to the account.
Joint operation with other NRIs/PIOs is permitted.
 The deposits can be used for all legitimate purposes.
The balance in the account is freely repatriable.
Interest lying to the credit of NRE accounts is exempt from tax in the
hands of the NRI.
Funds held in NRE accounts may be freely transferred to FCNR accounts of
the same account holder.
Likewise, funds held in FCNR accounts may be transferred to NRE accounts
of the same account holders.
Immediately upon return of the account holder to India and on his
becoming a resident in India,
NRE Account will be re-designated as Resident Rupee Account or converted
to RFC account as per the option of the account holder.
However, if the account holder is only on a short visit to India, the account
will continue to be treated as NRE account
 The initial deposit in NRE account can be made in any
of the following manners:
By proceeds of foreign exchange remittances from
abroad
through banking channels in an approved manner
By proceeds of foreign currency notes and traveler
cheques
brought into India by the non-resident while on a
temporary visit to India
By transfer from an existing NRE Account of the same
person
 Foreign Currency (Non Resident) Accounts (Banks) (FCNR (B)
Accounts)
NRIs / PIOs / OCBs are permitted to open such accounts
in US Dollars, Sterling Pounds, Australian Dollars, Canadian Dollars, Japanese
Yen and Euro.
The account may be opened only in the form of term deposit for any of the
following maturity periods; (a) one year and above but less than two years,
(ii) two years and above but less than three years, (iii) three years.
Interest income is tax free in the hands of NRI until he maintains a non-
resident status
or a resident but not ordinarily resident status under the Indian tax laws.
Money lying in FCNR (B) accounts can also be utilised for local disbursements
including payment for exports from India, repatriation of funds abroad and for
making investments in India, as per foreign investment guidelines.
 Non-Resident (Non-Repatriable) Rupee Deposit Accounts (NRNR
Accounts)
NRIs / PIOs / OCBs, other non-resident Individuals/entities
are permitted to open these accounts by transfer of freely convertible
foreign currency funds from abroad, or from NRE / FCNR accounts.
Non-residents can open joint accounts with other Non-Residents (except
Pakistan and Bangladeshi nationals) or resident close relatives in India.
Deposits can be held jointly with a resident.
Deposits can be for a period from 6 months to 3 years, and can be
renewed further.
Accounts may also be opened by transfer of funds from the existing
NRE/FCNR accounts of the non-resident accounts holders.
 The principal is non-repatriable; interest can be repatriated.
There is no income tax on the interest.
Accounts under the Non-Resident (Non-Repatriable) Rupee
Deposit Scheme may be opened in Indian rupees
out of the funds in freely convertible foreign exchange
transferred for the purpose to India in an approved manner
from the country of residence of the prospective non-
resident account holder or from any other country.
Transfer of funds from the existing NRE / FCNR Accounts of
the non-resident account holder may also open accounts.
 ACCOUNT OF ILLITERATE / BLIND PERSON
The Bank may at its discretion open deposit accounts other
than Current Accounts of illiterate person.
The account of such person may be opened provided
he/she calls on the Bank personally along with a witness
who is known to both the depositor and the Bank.
Normally, no cheque book facility is provided for such
Savings Bank Account.
At the time of withdrawal/ repayment of deposit amount
and/or interest, the account holder should affix his / her
thumb impression or mark in the presence of the
authorized officer who should verify the identity of the
person.
The Bank will explain the need for proper care and safe
keeping of the passbook etc. given to the account holder.
The Bank official shall explain the terms and conditions
governing the account to the illiterate / blind person.
 Dormant Accounts
Accounts which are not operated for a
considerable period of time will be transferred
to a separate dormant / inoperative account
status in the interest of the depositor as well
as the Bank.
The depositor will be informed of charges, if
any, which the Bank will levy on dormant /
inoperative accounts.
The depositor can request the Bank to activate
the account for operating it
 Accounts of Married Women:
Marriage of woman does not affect any right of
her separate property (Streedhan).
Section 14 of the Hindu Succession Act, 1956
provides that property of a Hindu female shall
be her absolute property.
A Married woman has a legal entity of her own,
which is separate from her husband.
According to the Hindu Marriage Act
1956,Hindu married women can have separate
property in her own name.
 A married woman can open accounts in her own name,
operate freely and enjoy overdraft limit as long as the
liabilities are met out from her own property.
At the time of opening the account in the name of a
married woman the name and occupation of her
husband, details of his employer is obtained and
recorded.
Some banks also obtain the maiden name of the
married women
 A married woman can make her husband liable
for the overdraft enjoyed by her
If she borrows money for the necessities of her
life,
If she borrows for the necessaries of her house
hold,
If she acts as agent of her husband.
The status of the married women is governed
by the following Acts:-
(a) Hindu Succession Act, 1956
(b) Married Women's Property Act, 1874
(c) Indian Succession Act, 1925
 Account of Pardanasheen Women:
A pardanasheen women is a women who puts a veil and does not
show her face to people /outsiders and observes complete seclusion.
Even they do not pose for photographs.
Contract entered into by a Pardanasheen Woman is not a contract
free from all defects.
Banks generally refuse to open accounts in the name of
Pardanasheen Women, because identity of Pardanasheen Women
cannot be ascertained as she observes complete seclusion.
However, if under special circumstances, such an account is opened,
two respectable persons known to the branch invariably attest the
signatures on the account opening form.
 Accounts opened by Illiterates:Those who
are unable to sign but use thumb impression are
illiterates for banks.
Illiteracy does not make a person incompetent
to contract.
Therefore an illiterate person can open and
operate a bank account.
However, banks do not open current account of
illiterate person.
For opening an account the person has to come
to bank personally along with a witness who is
known both to the depositor and to the bank.
.
 While opening an account banks obtain left
hand thumb impression of illiterate men and
right hand thumb impression of illiterate
female.
The thumb impression is obtained in the
presence of a person known to the bank and
the depositor.
The thumb impression is to be witnessed by a
customer of the bank and noting to this effect
is done (left/right thumb impression of Mr./Ms.
affixed in my presence). .
Normally, no cheque book is issued to the
account holder
 Opening of accounts by a person who can
not sign due to loss of both hands:A
handicapped person is not barred from
opening an account.
Banks entertain the requests from
handicapped persons for opening their
accounts.
After observing all account opening norms
and obtaining the photograph of the
handicapped person, bank opens account.
In terms of the General Clauses Act, the term
Sign with its grammatical variations and
cognate expressions, shall with reference to a
person who is unable to write his name,
 The Supreme Court has held in AIR 1950 Supreme
Court, 265 that there must be physical contact between
the person who is to sign and the signature can be by
means of a mark.
This mark can be placed by the person in any manner.
It could be the toe impression, as suggested. It can be
by means of mark which anybody can put on behalf of
the person who has to sign, the mark being put by an
instrument which has had a physical contact with the
person who has to sign.
In case the person has lost both hands bank obtains
his/her toe impression (either right or left) on the
relevant forms in presence of bank officials and a
witness.
As an alternative, the person is also advised to give a
suitable power of attorney to a person of his/her
confidence
 Operations in accounts by blind persons:
o Banks allow the next of kin of a blind customer to operate his
account as a
guardian or a representative of the blind person
In the Case No. 2791/2003, the Honourable Court of Chief
Commissioner for Persons with Disabilities had passed Orders dated
05.09.2005 that banks should offer all the banking facilities including
cheque book facility, ATM facility and locker facility to the visually
challenged and also assist them in withdrawal of cash.
In the above Order, the Honorable Court has observed that visually
impaired persons cannot be denied the facility of cheque book, locker
and ATM on the possibility of risk in operating / using the said facility,
as the element of risk is involved in case of other customers as well.
 Accounts by Old & Incapacitated Persons
With a view to enabling the old / sick account holders operate their
bank accounts, banks may follow the procedure as under: -
(a)Wherever thumb or toe impression of the sick/old/incapacitated
account holder is obtained, it should be identified by two
independent witnesses known to the bank, one of whom should be a
responsible bank official.
(b)Where the customer cannot even put his / her thumb impression
and also would not be able to be physically present in the bank, a
mark can be obtained on the cheque / withdrawal form which should
be identified by two independent witnesses, one of whom should be
a responsible bank official.
 (c)The customer may also be asked to indicate to
the bank as to who would withdraw the amount
from the bank on the basis of cheque /
withdrawal form as obtained above and that
person should be identified by two independent
witnesses.
The person who would be actually drawing the
money from the bank should be asked to furnish
his signature to the bank.
 Accounts of Insolvents:
A person when fails to pay his debts is declared
insolvent by the court.
As soon as a person is declared insolvent, operations in
his existing account is stopped forthwith and balance of
such accounts are disposed as per the instructions of
the Official Receiver.
Insolvency of an accountholder revokes the bank's
authority to pay the cheques drawn by him and the
balance at credit of the account and the entire estate of
the insolvent vests in the official receiver appointed by
the court.
 Declaration of insolvency renders invalid all the transactions
entered into subsequently and already entered into within six
months.
Banks do not open insolvents account nor advance money to an
un-discharged insolvent.
During the pendency of insolvency proceedings, no creditor can
have any remedy against the property of the insolvent in respect
of his debts or commence any suit or legal proceedings against
the property without the leave of the Court.
Insolvency of an agent does not affect the relationship of the
principal and agent
GARNISHEE ORDER
AND
ATTACHMENT ORDER
 The obligation of a banker to honour
his customers cheques is extinguished
on receipt of an order of the Court,
known as the Garnishee order, issued
under Order 21, Rule 46 of the code of
Civil Procedure, 1908.
If a debtor fails to pay the debt
owed by to his creditor,
the later may apply to the Court for
the issue of a Garnishee Order
on the banker of his debtor.
 The Code of Civil Procedure empowers the court
to issue the garnishee order.
Prior to the amendment in 1976,
there was no provision relating to garnishee
order in the code of civil procedure, 1908.
After the insertion of Amendment by the way of
Code of civil procedure Amendment Act, 1976,
a direct provision was added to the Code of
Civil Procedure, 1908.
It empowers the court to issue such an order on
the application duly filed by creditor.
 It is not mandatory on the courts to issue
the order
every time as and when the application for
its issuance is filed.
It is the discretionary power of the court
to issue a garnishee order and not the
mandatory provision.
The word may in the rule means that the
rule is discretionary
and the court may refuse to act under this
rule
if it inequitable or if it is likely to cause
prejudice to garnishee.
 The court may reject the application
or refuse
to issue such order if suitable
grounds are not found i.e.
if the affidavit filed by the decree
holder is vague
insufficient and ambiguous;
the proceedings would not sustain
and would come at stake.
 The court may, in exercise of sound
discretion
control the use of writs of
garnishment
to the extent of preventing it from
being abused or becoming
oppressive.
If the assets are belonging to the
defaulted member
it cannot be attached in Garnishee
proceedings
 While Garnishee order is very
good piece of legislation by our
parliamentarians, it has to be used
with caution.
While issuing such order, it is the
duty of the court to check whether
the case is prima facie.
It is also the duty of the court that
while exercising the discretionary
power, the power is not misused
and the innocent is not harassed
 Such order attaches the debts not
secured by a negotiable instrument, by
prohibiting
the creditor from recovering the debt and
the debtor from the making payment
thereof.
The account of the customer with the
banker, thus,
becomes suspended and
the banker is under an obligation
not to make any payment
from the account concerned after the receipt
of the Garnishee Order.
 The creditor at whose request the order is
issued
is called the
judgement- creditor,
the debtor whose money is frozen is called
judgement- debtor
and the banker who is the debtor of
the judgement debtor is called
the Garnishee.
 The Garnishee Order is issued in two
parts.
First, the Court directs the banker to
stop payment
out of the account of the judgement-
debtor.
Such order is called Order Nisi,
It also seeks explanation from the banker
As to why the funds in the said account
should not be utilized
for the judgement- creditors claim.
 The banker is prohibited from
paying the amount
due to his customer on the date of
receipt of the Order Nisi.
He should, therefore,
immediately inform the customer
so that dishonour of any cheque
issued by him may be avoided.
 After the banker files his explanation, if any,
the Court may issue the financial order,
called
Order Absolute
where the entire balance in the account or a
specified amount is attached
to be handed over to the
judgement- creditor.
 On receipt of such an order to the
banker is
bound to pay the garnished funds
to the judgement- creditor
Thereafter, the bankers liabilities
towards his customer are
discharged to that extent.
The suspended account may be
revived
after payment has been made to
the
 The following points are to be noted in this
connection:
A garnishee order may attach either the amount of
the judgement debtor with the banker irrespective
of the amount which the judgement- debtor owes to
the creditor or a specified amount only which is
sufficient to meet the creditor claim from the
judgement-debtor.
In the first case, the entire amount in the account
of the customer in the bank is garnished or attached
and
if banker pays any amount out of the same which is
in excess of the amount of the debt of the creditor
plus cost of the legal proceedings, he will render
himself liable for such payment.
 For example, the amt. to the credit of X, the
principal debtor,`Rs 10,000 is attached by the
Court while the debt owed by him to his
creditor Y is only ` 6,000.
If the banker honors the cheque of the
customer X to the extent of ` 5,000 and thus
reducing the balance to ` 5,000 he will be liable
for defying the order of the Court.
On the other hand, if he dishonors all cheques,
subsequent to the receipt of the Garnishee
Order, he will not be liable to the customer for
dishonoring his cheques.
 under Order 21 Rule 46 CPC. The Honble
Supreme Court held that Order 21 Rule 46
deals with the garnishee proceedings.
These apply when monies of judgment debtor
are in the hands of the third parties.
In cases of Letter of Credit the liability of the
issuing bank is an entirely independent
liability.
It cannot be said that the monies payable by
the issuing bank are monies belonging to the
judgment-debtor.
Thus, the claim, if any, can only be decided in
independent proceedings which should have
been adopted by the Appellants.
 Bank Account
In the case of a bank account which is in the joint
names of two persons their shares are taken as
equal in the absence of evidence to the contrary
Banker has the right to set off one account
against another account of the same person.
Where there is existing debt, payment whereof is
deferred and the case where the debt and its
payment rests in future.
In the former case, the debt is attachable and in
the latter it is not .
The fact that the amount of the debt due or
accruing is not ascertained does not prevent a
garnishee order nisi being made
 In Syndicate Bank v. Vijay Kumar, while
furnishing bank guarantee in favor of high
Court, the customer furnished two fixed
deposit receipts duly discharged to the bank
and authorized the bank the custody of the
receipts and renewals thereof.
The Honble Supreme Court held that it
becomes a general lien.
Bank can set off liability of the party against
the receipts.
If the fixed deposits are attached to bank
garnishee has to go to the court. The balance
after adjustments of banks claim shall be
available to satisfy the decree.
 Lien-Section 171 of the Indian
Contract Act,1872 gives to the
banker an absolute right of general
lien on all goods and securities
received by the banker.
The banker has general lien on all
deposits.
If the deposit receipt is given as a
security for raising a loan or
discharging an obligation then the
lien on such deposit receipt, is a
 Lien Important aspects:
General lien covers the entire amount due to
the bank from the borrower/ debtor.
Bankers General Lien:
This is applicable in the following situations:
when a banker receives goods and securities
for a purpose
lien is applicable for the goods and/or
securities which are belonging to a person who
has delivered them to the banker
there is no contract to the contrary and the
debt is not barred by limitation.
 A bankers lien is also called as an
implied pledge.
A banker has the right to retain
and if necessary
can also sell the goods and/or
securities charged in his favor.
As pledgee,
a banker can sell the
goods/securites pledged to him
 A banker cannot exercise his right of lien in
following situations:
1. In case when goods and securities are not
obtained by him in the ordinary course of
business:
2. In case of Safe Custody, when a banker
accepts goods/securites of a customer to be
kept in safe custody.
In this case the relationship of banker and
customer is that of the bailee and bailer.
Here the banker acts as a trustee and not as a
lender/creditor.
 3. When the goods or security are left
inadvertently or through oversight in the bank
premises,
the banker cannot exercise his right of lien on
them.
4. When money is deposited by a customer
with a request to transfer to another branch,
the banker cannot exercise the right of lien.
This is applicable even when the applicant for
the transfer of funds is a borrower .
5. The banker cannot have the right of lien
and right of set off at the same time.
THANK YOU