It’s quite a common practice among British Indians or Non Residential Indians (NRIs) to carry some amount of Indian cash with them when they leave India, mainly for the convenience of not having to exchange forex into rupee when they return the next time. With demonetisation of Rs 500 and Rs 1000 notes which are not valid from 8 Nov 2016, questions that NRI are asking is how to exchange Rs 500 and 1000 Rs notes. According to the UK government census, British-Indians make up 2.5% of the population of England and Wales according to a 2011 UK government census. Every year at least 200,000 British Indians or NRIs visit India. Many of them are avid followers of PM Narendra Modi, supporting this initiative of demonetisation.
MPs like Keith Vaz, Gareth Thomas and Virendra Sharma, who represent constitutions dominated by Indians, are constantly receiving calls and requests from their constituents for a solution to their agony.
Keith Vaz has already appealed to the Indian Prime Minister Narendra Modi and his government to extend the deadline to deposit Indian cash for foreign nationals by at least six months.
He wrote to Bank of England Governor Mark Carney requesting him to allow British Indians to exchange their banknotes in the UK.
The Governor in a letter to Mr Vaz said, "Whether it will be possible to deposit or exchange high-value Indian Rupee banknotes at Indian banks in the UK is a matter for the Indian government. Nonetheless we have looked into whether there would be any regulatory obstacles, stemming from the rules set by Bank's Prudential Regulation Authority (PRA), which is responsible for the prudential supervision of banks, building societies, credit unions, insurers and major investment banks in the UK.
"More specifically, the PRA understands that an approach has been made by the Non-Resident Indian community in the UK to the Indian government and Reserve Bank of India to allow high-value Rupee notes to be deposited with Indian banks in the UK for the credit of their accounts. The PRA can confirm that it does not envisage any UK prudential regulatory obstacles if the Indian authorities decided to allow Indian Rupee notes to be deposited with Indian banks in the UK.
"The PRA has also spoken to the Financial Conduct Authority (FCA), which acts as the conduct/financial crime regulator. The FCA indicated that it has no objection should any Indian banks wish to exchange these notes or accept them as deposits, providing they have the necessary prior consent from the relevant Indian authorities. Of course, the FCA would expect that these banks apply robust anti-money laundering controls, to ensure that they are not used to facilitate financial crime."
Mr Vaz said: “Mark Carney has gone the extra mile to ensure members of the Indian diaspora in the United Kingdom may be able to exchange their Indian currency in the UK, following the bold decision to demonetise certain Rupee denominations.
"He has presented a pathway for this issue to be resolved which will hugely benefit members of the Indian diaspora in the UK.
"The Indian government is now free to enable currency to be exchanged in the UK, and avoid the deep concern currently being faced by many members of the British Indian community, who may not be able to travel to India by the deadline.
"The Governor’s efforts to remove any obstacles which may prevent this are most welcome, and I am sure the community as a whole will wish to thank him for doing so. I will be writing to Indian Finance Minister Arun Jaitley with a copy of this letter in the hope these issues can be resolved.”
Rt Hon Virendra Sharma MP, called on the Indian government to end the uncertainty surrounding the demonetisation.
The 69-year-old Labour party MP has received several calls and letters on the issue from his constituents in the heavily Indian-origin area of Ealing, Southall, in south-west London.
Sharms said, "Still a month after the announcement of the demonetisation of Rs 500 and Rs 1,000 notes millions of NRIs are living with uncertainty. The stress and strain of not knowing whether families will lose money.
"Thousands of families have a small amount of currency at home, to save exchanging money at the airport. These are the people that are accidentally being punished. Having a few thousands rupees does not make you a money launderer, and still they are suffering.”
The India-born MP wants the Indian Government to authorise Indian banks with operations in the UK to open accounts for deposits of Indian Rupees.
"This money should then be held and made available for withdrawal only in India. This would protect the economy, but still offer freedom to many thousands of Indian citizens and NRIs not based in India," he added.
At the moment, how can NRIs exchange Rs 500 and Rs 1000?
NRIs would personally need to exchange the notes in India or authorise someone to do it for them. The foreign branches of Indian banks, both public and private sector, are not accepting cash outside the country.
- If NRIs are travelling to India between 9 nov 2016 to the 30 December 2016, they can exchange or deposit it in their NRO account.
- If NRIs are travelling to the country between 02 January and 31 March 2017, they can visit any of the specified offices of the RBI along with the required documentation, passport and visa details, that prove they were out of the country and exchange the notes. Although the list of RBI offices that will accept this is still unclear.
- If NRIs have the banknotes in India, they may authorize in writing enabling another person in India to deposit the notes into their bank account. The authorized person has to come to the bank branch with the notes, the authority letter given by you and a valid identity proof to deposit the money on your behalf.
- If NRIs have the money abroad, they can send the money across to India through someone trustworthy and authorize them to deposit it on their behalf.
What is Asian Voice proposing?
British Indians can leave India with Rs 25,000 per person. Individually it is a small amount of money but collectively (200,000 visitors/year) it is around Rs 2500 Crore (£250mn) over a period of 5 years. We would like the Indian government to allow the Brit-Indians and NRIs to be allowed to deposit their money at Indian banks here in the UK after the necessary due diligence eg proof of their last travel to India etc. They could withdraw this amount from their NRO account, whenever they visit India.
The RBI has confirmed that anyone visiting can still leave India with Rs 25,000 but in legal tenders (the new notes).
MPs and Peers supporting
Lord Jitesh Gadhia, an investment banker and businessman supporting this initiative said, "Prime Minister Modi's demonetisation initiative clearly has a noble intent so it would be a great shame if the global NRI community became innocent victims.
“I would appeal to the decency and common sense of the Modi Government to allow NRI's to deposit Rs 25,000 per person into existing or new bank accounts at overseas branches of Indian banks. This is the official amount that NRI's are already allowed to take out of India and also take back in cash.
“The amounts involved might be small, individually, but it is the principle that counts: the drive to eradicate black money should not lead to the unintended consequence of taxing the white money of NRI's. Prime Minister Modi should act now to preserve the immense goodwill he has generated amongst the Global Indian diaspora"
Lord Meghnad Desai, a leading Economist told Asian Voice, “I think that is a good idea. But the Government of India is very wary that people are using various channels to launder their black money. It will be necessary to convince the Government of India that NRIs are not part of this scam.”
Dinesh Patnaik, Deputy High Commissioner of India to the UK told the media last month, "Our endeavour is to help everybody. We have asked New Delhi about it (any banned notes with NRIs). I have a feeling we will work out something so that people who have carried certain amount of cash in their pocket, should be able to deposit it in any Indian bank abroad.
"Basically, it means people abroad should not have more than that. Also, not everybody will have an account with an Indian bank - either they will have to open one or find an alternative. So, it is something we will have to look at very closely. There is a lot of time, until December 30," he said.
"This is not an amnesty scheme or any scheme to garner black money. This is a method to achieve cashless transactions, which in itself will stop corruption, and to make sure that the money which is lying within the non-legal system, gets into the legal system.
"And, of course, the threat of fake Indian currency will be eliminated, because that threat was mostly with Rs 500 and Rs 1,000 notes. The new Rs 2,000 and Rs 500 will have greater security features and it will make it more difficult for counterfeiters to try and copy it," he added.
