Returning to India? Financial planning moves to make before you land

Returning to India after years abroad marks a major life transition that goes far beyond relocation. For manyNon-Resident Indians (NRIs), this homecoming combines emotion with complex financial decisions. Bank accounts, investments, taxation, and insurance, all need realignment under Indian regulations once residency changes.

A well-structured plan is important to prevent penalties, tax inefficiencies, and unnecessary paperwork later. Whether the move is for retirement, business, or family reasons, early financial preparation matters for a smooth re-entry into India’s financial system.

Look at some useful financial planning tips you can consider to make this transition seamless.

1. Reclassify your bank accounts

As you prepare to return, reviewing your NRI banking arrangements becomes important. When you stop qualifying as an NRI, your Non-Residential External (NRE) and Non-Resident Ordinary (NRO) accounts cannot be kept in their existing form. They must either be converted into resident savings accounts or closed.

Foreign Currency Non-Resident (FCNR) deposits can continue until maturity. Post that, the proceeds can be moved into either a resident or aResident Foreign Currency (RFC) account. Making this transition on time is important to comply with theReserve Bank of India’s (RBI) regulations and avoid penalties.

Retaining international bank accounts is permissible, subject to regulatory conditions in the jurisdiction of origin.

2. Open a resident savings account without delay

Most banks allow digital account openings via Aadhaar and PAN authentication. This facilitates:

• Hassle-free bill payments and local transactions
• Quick access to mobile and net banking
• Easy linkage for investments, insurance, and utility services

If you maintain NRI accounts across several banks, plan their conversion in a phased manner to avoid liquidity problems.

3. Review and realign your investment portfolio

A shift in residency status needs specific actions for your NRI investment accounts.

Demat account

• Inform your bank and broker of your change in residential status immediately.
• Open a new resident demat account and transfer existing securities from the NRI demat account.
• Close your NRO/NRE Portfolio Investment Scheme (PINS) accounts after the transfer is complete.
• Complete a fresh Know Your Customer (KYC) process. Update your Foreign Account Tax Compliance Act (FATCA) or Common Reporting Standard (CRS) declarations (if applicable).

Mutual funds

• Inform your Asset Management Company (AMC), bank, or broker about your new residential status.
• Update linked NRE/NRO bank accounts to resident savings accounts.
• Submit updated KYC and FATCA/CRS declarations across all mutual fund investments.

Fixed Deposits (FDs)

• Convert existing NRE/NRO fixed deposits to resident fixed deposits.
• You continue to earn interest, but earnings will be taxed as per Indian regulations.

4. Manage overseas assets  

As per the current Foreign Exchange Management Act (FEMA) regulations, you are permitted to continue holding your overseas assets acquired during your non-resident years even after becoming a resident of India. However, it is critical to confirm with your current country of residence if you can legally retain those holdings after returning to India.

5. Take care of insurance policies

Here are some pointers to keep in mind:

• Indian insurance policies bought during NRI status can be continued if needed.
• Insurers must be informed of the change in residency status.
• Linked bank details and documents need updating with the insurer.
• Foreign insurance policies may not remain valid after returning to India.

A quick examination of your insurance arrangements helps avoid gaps in coverage after relocation.

6. Plan for the long term

As a returning resident, you can nowaccess investment products previously unavailable to NRIs, such as:

• Public Provident Fund (PPF) (initiating or overseeing)
• National Pension System (NPS) Tier II accounts
• Intraday trading in stocks
• New issues of Sovereign Gold Bonds (SGBs)

Balancing new opportunities alongside global investments can make the portfolio stronger and better able to weather fluctuations.

To sum up

The entire journey from an NRI to a resident involves many changes. Hence, it is crucial that you take all the essential steps to stay in compliance with Indian rules and regulations. Promptly notify your banks, brokers, and insurance providers about the change and convert NRE and NRO accounts to resident status. Also go through your investments, as the tax implications will also change once residency changes.

Careful planning and informed choices make the return to India a smooth and confident transition. To simplify the process, you can consult your bank or a financialadvisor.