Do NRIs need a Mandate Holder in a Bank Account?

Do NRIs need a Mandate Holder in a Bank Account?

Non-Resident Indians (NRIs) find it hard to manage all their accounts in India. It’s advisable for NRIs to have someone trustworthy to manage their financial affairs in India. NRIs have three options for this:

  1. Power of attorney
  2. Joint account
  3. Mandate holders

Among these, “mandate holder” has always been a confusing topic for NRIs. While it is not legally necessary to have a mandate holder in a bank account, it is important. It facilitates easy and quick maintenance of the bank account. Also, carrying out certain transactions becomes simpler with a mandate holder.

However, there are several questions that NRIs need answers to before appointing a mandate holder. So, let’s jump straight to those questions and find the answers:

Who can be appointed as a mandate holder?

NRIs can appoint their family members or any other Indian citizen they trust as their account’s mandate holder.

Banks, however, prefer that close relatives of the NRI be registered as a mandate holder.

How do I appoint a mandate holder?

To register a mandate holder with your bank, you need to follow the steps below:

  1. Get the mandate holder application form from the bank branch or website.
  2. Complete the form. Get the signatures of all the account holders.
  3. The form needs to be submitted with complete Know Your Customer (KYC) details. Mandate holder’s photographs, self-attested copies of address, and proof of identity should also be attached. These copies should also be signed by the NRI account holder.

Once the bank approves the form, the mandate holder will receive a checkbook and an ATM card for the bank account.

You can contact your partner bank to get started with the process for registering a mandate holder.

What are the rights of a mandate holder?

After the appointment, the mandate holder has the right to carry out the following day-to-day transactions:

  1. Withdrawing money
  2. Drawing checks
  3. Making suitable investments on behalf of the NRI
  4. Managing investments and fixed deposits
  5. Depositing money in the account

What can the mandate holder not do?

Some of the things that are outside the purview of the rights of the mandate holder include:

  1. Opening an account in the NRI’s name
  2. Closing an existing account in the NRI’s name
  3. Changing the name, address, or other key details of the account
  4. Remitting funds by means of gift
  5. Transferring funds to accounts outside India (Except for the NRI’s foreign account)

Can NRIs limit the rights of the mandate holder?

Yes, NRIs do have the option to limit the amount that the mandate holder can debit from the account.

The exact procedure for adding this limit varies from bank to bank. NRIs can get in touch with the executives of their partner banks for the exact procedure.

How do I revoke the mandate?

Situations can arise when NRIs wish to revoke the mandate and de-register the mandate holder of their bank account. In such cases, the NRI needs to send written instructions to the bank instructing them to revoke the mandate.

Mandate holder vs. Nominee

NRIs often get confused about the difference between mandate holders and nominees.

It is important to note here that mandate holders are like the caretakers of the NRI’s account. They have no legal rights over the account. He or she only has the right to operate the account on behalf of the account holder.

A nominee, on the other hand, when appointed, will have the right to claim the account in the unfortunate event of the NRI account holder’s death.

Mandate holder vs. Power of attorney

Mandate holders and holders of power of attorney have similar rights when it comes to an NRI bank account.

However, registering a mandate holder is a much quicker and easier option for NRIs. It requires less documentation and, thus, is often preferred over power of attorney.

Power of attorney has to be notarized and registered with the Registrar of Assurances.

Who bears the tax implications related to the bank account?

The tax liabilities emanating from the bank account have to be borne by the NRI account holder.

The tax filings and payments need to be done by the account holder.

The mandate holder has no responsibility in this regard.

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