NRIs stay outside India & face challenges in managing their assets in India – they have a couple of options to manage their accounts here. So what should be preferred – Power of attorney, joint account, or a mandate holder in a bank account?
Who is a Mandate Holder in an NRE/NRO account?
A Non-Resident Indian (NRI) who has an NRE/NRO account can appoint a resident Indian as a mandate holder. The mandate holder can manage the account on behalf of the NRI.
The resident Indian has to be a close relative (family member). A mandate holder cannot be a company or a minor. One account can have only one mandate holder.
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Why should an NRI appoint a mandate holder?
The NRI is outside the country most of the time. Sometimes there are financial matters that need a physical presence. Many times, the family members need cash urgently and cannot wait for the NRI to transfer cash, etc. In such cases, the mandate holder can act on behalf of the NRI and perform the transactions.
What are the rights of a Mandate Holder?
The mandate holder can carry out day-to-day banking transactions like withdrawing money for local payments, drawing cheques for local disbursements, manage FDs, make investments suitable for NRIs. The NRI can set up a limit on the maximum amount a mandate holder can debit from the account. The mandate holder can also deposit money in the account.
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What is a Mandate Holder not allowed to do?
A mandate holder does not have the right to –
- Open or close an NRI account.
- Change key details such as name and address in the account.
- Transfer funds outside of India except to the NRI account holder.
- Transfer funds as a gift to anyone.
“NRI can also ask the bank to issue an ATM card and cheque book to the mandate holder.” wiseNRI
What are the steps to register a Mandate Holder for an NRE/NRO account?
Most banks allow registering a mandate holder. The following steps broadly cover the process of registering a mandate holder. You need to check with your particular bank to find out the exact process and documentation.
Steps to Register –
- Get the appointment form either from the branch or the bank’s website. For example, here are the links for the form –
- Complete the form with the signatures of all account holders.
- The holder submits the form along with KYC details, photographs of a mandate holder, and self-attested copies of identity proof and address proof of the holder. The copies need to be signed by the account holders as well.
- The bank approves of the appointment and registers the mandate. A checkbook and an ATM card are sent to the mandate holder.
How can a mandate be revoked?
The NRI has to submit a request in writing to the bank if the mandate on his NRE/NRO accounts has to revoked.
What is the difference between a mandate holder and a nominee?
A mandate holder operates the bank account on behalf of the NRI. He/She does not have any rights over the account. A nominee, on the other hand, is the person who will be eligible to claim the balance in the bank account when the account holder expires. The nominee is appointed by the account holder.
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What is the difference between a mandate holder and a power of attorney?
A mandate holder and the power of attorney have similar rights and responsibilities when it comes to the NRI’s bank account.
Are there any tax Implications on a Mandate Holder in his role of managing the NRI’s account?
The mandate holder does not have any tax implications as the holder acts on behalf of the NRI. Whatever tax implications are there, they are the responsibility of the NRI and he must file his tax returns appropriately.
This post is written by Vidya – she is an NRI.
If you have any questions regarding “a mandate holder in a bank account” – add that in the comment section.