Power of Attorney on NRI accounts

Do you hold an NRI bank account? Is managing your account a challenging task? Not to despair! We have just the right solution to help you out of your difficulties. Enlisting the help of a POA or a Power of Attorney will enable you to operate your NRI account with ease.

Read right on to know more about POA and to find out how you can benefit by taking this course of action.

 

What’s a Power of Attorney (POA)?
 A POA is a document by which you can authorize some other person to act on your behalf. You can issue a General POA or a Specific POA (only for a specified transaction or purpose).

 

POA for NRI accounts

 

A shortcoming of being an NRI is that you cannot be physically present to handle your financial matters for most of the year. However, you can solve this problem by issuing a POA in favor of any resident Indian you trust – a friend, family member, etc. – to act on your behalf. For example, you can legally authorize your parents to operate your NRI bank account via a POA.

 

Importance of POA for NRI accounts

 

POAs are especially important in operating NRI bank accounts. Most NRIs hold NRI accounts with banks so that they can provide for their loved ones in India. Another common reason is to make investments. A POA can be useful for both these purposes. A POA holder can withdraw money from the account to make local payments, say monthly bills. S/he can also make investments on your behalf using the funds in the account.

 

Limitations

 

The Indian legislation limits the powers of a POA holder for some transactions.

• A POA holder cannot open an NRI account but can only operate it.
• S/he cannot transfer funds outside India through the NRI Account (except to the account holder).
• S/he cannot transfer funds in the NRI account as a gift to another resident.
• S/he cannot transfer funds from an NRI Account to another NRE Account.

 

How can you draw a Power of Attorney?

 

Most banks have a readymade format called the ‘mandate letter’. It’s generally provided at the time of opening the NRI Account. You can even fill it up and submit it to the bank at a later time. If the bank doesn’t give you a format, then you should get the POA drafted through a lawyer. However, note that you can issue a POA only to a resident Indian.

 

A word of caution

 

A POA to operate a bank account bestows tremendous authority upon the POA holder. Hence, be sure that the person to whom you give your POA is trustworthy and will act in your best interest.

 

Do you think that a Power of Attorney is important for operating an NRI Account? Is it useful? Should NRIs think of entrusting someone in India with a POA to handle their transactions? Would you?