Dubai: If you have some stash of discontinued rupee banknotes and are unable to send them back to India or exchange them right away, there’s no reason to despair.
According to a financial expert, there are still other ways that non-resident Indians can do, to avoid wasting their hard-earned money.
Preeti Bhambri, founder of personal finance site MoneyCamel.com, said that going through formal or legal channels is the best option expatriates have at this point. And one of these channels is the non-resident ordinary (NRO) savings account.
“NRIs, including UAE residents, can deposit the abolished 500 and 1,000 rupee notes that they are holding back into banks through an NRO account,” said Bhambri.
She said expatriates can deposit their money before the December 30, 2016 deadline if they are traveling back to India. If they’re unable to do so, they can authorize someone on their behalf to carry the cash from UAE to India and deposit it in their account.
Still, if they fail to meet the December deadline, there’s one more option left. They can travel to India later and deposit the money in “offices” authorized by the Reserve Bank of India between January 2, 2017 and March 31, 2017.
The Indian Government implemented an overnight ban on old 500 and 1,000 bills on November 8, creating chaos at ATMs and banks in India. The move is intended to week out black money, but it has caused some panic within the non-resident Indian (NRI) community in the UAE.
Money transfer houses reported that they have been inundated with requests from expats who are desperate to exchange the old money. Experts said it’s not surprising to see a lot of expatriates holding on to huge amounts of foreign banknotes.
“India is very much a cash-based economy, and the practice in India is very much to have potentially significant amounts of cash stored at home. Obviously, when those Indians become expats here, they can’t leave the cash at home, so the cash is relocated to the UAE in rupees – and this may well be done outside the commercial banking system, “ said Jonathan Rawling, CFO of compareit4me.com.
“The immediate problem is that currency exchange houses aren’t taking these discontinued rupee notes. It’s unclear for them how they will then be able to dispose of the same. Our advice would be to take early action,” Rawling added.
“We think it’s extremely unlikely that the Indian government’s position will be reversed, and hence there will be a very limited window of opportunity for people to convert or deposit all of their rupees.”
For those who can travel back to India to deposit the old banknotes next year, they need to show some documents, and amounts of more than 250,000 rupees can be questioned.
As for the documents, Bhambri is unable to specify what these are, but she said “these could be an identification proof and supporting income documents from the previous year.”
“[And] since UAE residents are exempt from tax from income earned in UAE through salary or reported trade, they should have no issues with this situation,” Bhambri said.
