NRK Sandesham

Wherever you go we are there . . .

Editorial Team Team Leader:

Smt. Smitha S Nair Shri Lalson Jacob Shri. Akella.V.Prasad, DGM (PBBU & NRI)

A monthly news letter from, NRI Services, State Bank of India, Local Head Office, Trivandrum : nri.lhotri@sbi.co.in : 0471 2336383, 6549966 : + 91 9447778606

Our Editorial Team:

- Chief

Manager & Nodal Officer (NRI Services)

Shri. Balakrishnan P - Chief Manager (PBBU)

- Assistant Vice President (PBBU)

Volume: III

Issue No. : 2

May 2013

Recent developments
The Reserve Bank cut the Bank Rate by 0.25 per cent to 7.25 per cent and kept the liquidity enhancing cash reserve requirement unchanged. The RBI in its annual monetary policy statement said there would be modest improvement in the country's economic growth to 5.7 per cent in the current fiscal, as against the decade's low of 5 per cent in FY 2012-13. A house-to-house survey of Non-Resident Keralites (NRKs) is under way in Kerala to create a thorough data bank for formulating policies for welfare of thousands of Malayalis working abroad, mostly in the Gulf countries. The exercise, which began on May 1 along with the sixth economic census of the Central Statistical Organisation, will cover the entire household in the length and breadth of the state to enumerate the exact number of people working abroad and also the expatriates. The survey is being conducted by the Bureau of Economic and Statistical Department, which have fanned its enumerators in all parts of the state to completed it by mid-June. SBI has entered into Rupee Drawing Arrangement (RDA) with Redha Al Ansari Exchange Co,(RAAEC), UAE and Lari Exchange Co., (LEC), Abu Dhabi, UAE. Both the exchange houses has been authorised to send remittances through our Speed Remittance product SBI Express with immediate effect. Under this agreement : a) Direct credit to the beneficiarys account will be effected wherever beneficiary is maintaining account with a branch of SBI. b) Wherever the beneficiary is maintaining an account with a branch of any other bank, credit will be effected through NEFT (National Electronic Fund Transfer). Address of Exchange houses: Redha Al Ansari Exchange Co., (RAAEC), UAE 605, Al Masaraf Towers, Baniyas Road, Deira, Dubai, P.O Box:8828,UAE. Lari Exchange Co. P.O. Box: 988, Liwa Street, Abu Dhabi, UAE. The State Bank of India has raised $1 billion from an overseas bond sale. The five-year unsecured notes denominated in US dollars issued by the London branch of SBI and will carry a coupon of 3.25 per cent (US Treasury plus 255 basis points). State Bank of India has been conferred the National Award 4th consecutive year by KVIC, Ministry of Micro, Small and Medium Enterprises (MSME), Govt of India, for the outstanding performance in implementation of Prime Minister's Employment Generation Programme (PMEGP) Scheme at national level for the year 2012.

New SBI Branches opened in Kerala during April 2013

No. 1 2 Branch name Poonkunnam Olari email id sbi.16080@sbi.co.in sbi.16658@sbi.co.in District Trichur Trichur

State Bank of India Home Loan customers who are paying higher rate of interest at present can switchover to current lower rate by paying a nominal fee of 0.56% w.e.f 21st September 2012

Customer Lounge of our recently opened NRI Pathanamthitta Branch

NRI Quiz -2
1. The Foreign Investment Promotion Board (FIPB) on 6 March 2013 cleared the investment proposal of which Malaysian budget carrier to launch the new airline along with Tata Group and Arun Bhatia's Telestra Tradeplace?
a) Tiger Airways b) Jetstar

c) Airasia

2. Can NRIs make investments in non-convertible debentures of Indian companies? a)Yes b) No c) if authorised by the RBI 3. PIS stands for a) Portfolio Investment Services c ) Portfolio Investment Scheme

b) Product Investment Services

4. Can Power of Attorney holder credit proceeds of foreign currency notes/bank notes and travellers cheques to the NRE accounts?: a) Yes b) No 5. NRIs cannot invest in a) Units of domestic mutual funds b) Units of Money Market Mutual Funds c) National Plan/Savings Certificates d) Public Provident Fund Answers in page 4

FCNR (B)- ACCOUNT & FCNR (B) PREMIUM ACCOUNT

Foreign Currency Non Resident bank account (FCNR) account are those account wherein a Non-resident Individual of Indian nationality or Indian Origin can maintain a Fixed Deposit in select Foreign Currency and earn regular interest on the same. For those NRIs sending money across to India, the possibility of foreign exchange risk exists, by way of conversions done at the time of investment and again at the time of repatriation. To beat such risks, the FCNR deposit is an ideal option. FCNR deposits could be maintained in US Dollar, British Pounds, Euros, Japanese Yen, Canadian Dollar, Australian dollar, Swiss Frank (CHF), Danish Krone(DKK), New Zealand Dollar (NZD), Swedish Krone(SEK) Minimum 1 year to Maximum 5 year The principal and the interest earned on FCNR deposit is fully repatriable. Minimum deposit USD 1000 or equivalent. Rupee Loan can be taken against the security of FCNR deposits. SBI NRI Trivandrum Branch is authorized to give demand loan in Foreign currency against FCNR Deposit .

FCNR(B) Premium Account

The FCNR(B) Premium Account combines the benefits of a FCNR (B) deposit with Forward Cover to give attractive return to the depositor. The features of FCNR (B)-Premium Account are : Deposit Tenor: 1 year. Minimum deposit: USD2000/GBP2000/EUR2000/AUD2000/CAD2000/JPY200000. FCNR (B)- Premium Account can be opened by (i) Conversion of existing balance of NRE Savings Bank/Fixed Deposit to FCNR(B) deposits (ii) Remittances from abroad Both principal and interest are payable in Indian Rupees and to be credited on maturity in NRE Savings bank account only which is fully repatriable. No auto renewal facility. Pre-mature payment is subject to regulations as applicable to FCNR(B) deposits. In case of cancellation of Forward Contract by the customer, cancellation charges and exchange gain/loss has to borne by the customer at prevailing rate. No interest is payable if the FCNR (B) deposit is closed before maturity. Maturity proceeds are fully repatriable from NRE Savings bank account. Maturity proceeds are payable in Indian Rupees It, is, however, to be noted, that while the yield on the deposit is higher i.e., interest rate + forward premium that they receive on account of booking the forward contract. The proceeds will be given in Indian Rupee (repatriable) and that too, at the pre-determined forward rate and is fully repatriable.

Lateral Thinking No. 2

1 2 3 4 5

Answers of these Ribus puzzles will be published in the next issue.

Answers of Lateral Thinking - 1 from April 2013 issue

1. Seven Seas 2. Split level 3. Forgive and forget 4. Missing you 5. Down Town 6. Lucky break 7. He is beside himself 8. See through blouse 9. First aid 10. West indies . 11. Six feet underground 12. Backward glance 13. Tri-cycle 14. Reading between the lines 15. Cross roads

RATES OF INTEREST ON NON RESIDENT DEPOSITS*

Non Resident Ordinary (NRO) deposit interest rates (%)

Duration 7 days to 1 year 1 year to 10 years (w.e.f. 01/03/2013 (% p.a.)) Deposit below Min.Rs.15 lacs but less Rs.15 lacs than Rs.1 Crore 6.50 7.50 8.75 8.75 Deposit of Rs.1 Crore and above 7.50 8.75

NRE Term Deposits-Retail and Bulk Deposits

Duration 1year -10 years (w.e.f. 01/03/2013 (% p.a.)) Revised interest rates (%) p.a. 8.75

FCNR(B) Deposits
(w.e.f. 01/05/2013 (% p.a.))
Interest Rates (% p.a.) Duration (a) (b) (c) (d) (e)
1 yr and above but less than 2 yrs 2 yrs and above but less than 3 yrs 3 yrs and above but less than 4 yrs 4 yrs and above but less than 5 yrs 5 yrs only USD 2.70 2.36 3.45 3.60 3.82 GBP 2.89 2.59 3.65 3.75 3.90 EURO 2.40 2.39 3.48 3.60 3.75 CAN$ 3.76 3.29 4.36 4.47 4.59 AUD 5.51 4.78 5.92 6.12 6.26 JYEN 2.44 2.27 3.30 3.35 3.40 CHF 2.25 2.11 3.17 3.28 3.39 DKK 2.50 2.56 3.65 3.77 3.92 NZD 4.69 4.81 6.02 6.16 6.30 SEK 3.20 3.25 4.36 4.47 4.58

RESIDENT FOREIGN CURRENCY A/C. (RFC) w.e.f 01/05/2013 Period 1 year and above but less than 2 years 2 years and above but less than 3 years 3 years only

(%P.A.) USD
2.70 2.36 3.45

GBP
2.89 2.59 3.65

EURO
2.40 2.39 3.48

Note : - Minimum Amount USD 1000 or equivalent for RFC deposits All these interest rates are subject to change, without notice . The revised interest rates are applicable only on fresh deposits and renewal of maturing deposits.

*Subject to change. Visit our website www.onlinesbi.com/nri for latest interest rates. For more details scan the QR Code below;

Answers to NRI Quiz -2 from page 5 Answer Qn No. 1. c 2. a 3. c 4. b 5. d

Savings Bank deposit interest rate (NRO & NRE) 4.00%

SBI Car Loans for NRIs

Now available as Overdraft also For New NRI Car Loans 0.75% above B.R. i.e 10.45% p.a. (for all periods) EMI per lakh = Rs.1683/- only, for a 7 year loan. (Base Rate, B.R 9.70%)

NRI Housing loan interest rates

Loan Amount Upto Rs 30 lacs Above Rs 30 lacs Linkage with Base Rate over the tenure of the loan (Current B.R 9.70%) 0.25% above Base Rate 0.40% above Base Rate Effective rate 9.95% 10.10% EMI per lac (For 30 yr loan) Rs.874/Rs.885/-

Period 25 Years 20 Years

Assumed Housing Loan Amount Rs. 30 Lacs EMI at the other Bank EMI at SBI Savings Savings due to Interest income on (Interest reduction in account of deposit (Assumed per rate EMI over total of the difference in Interest month rate 9.95%) tenure EMI as RD
10.75%)

Total Gain on account of switchover to SBI Home Loan 17,57,869 10,06,493 5,37,437

28,863 30,457

27,155 28,851

1,708 1,606

5,12,400 3,85,440

12,45,469 6,21,053 2,70,497

33,629 32,146 1,483 2,66,940 15 Years Interested send an email to us. We will be reaching you. Correction

In the previous issue the frequency of MTSS for a beneficiary was wrongly mentioned as 12. Please note that it has since been increased to 30 transactions per calendar year per beneficiary.

DOUBLE TAXATION AVOIDANCE AGREEMENT

The Double Tax Avoidance Agreements (DTAA) is a bilateral agreements entered into between between India and other foreign states. The basic objective is to avoid, taxation of income in both the countries (i.e. Double taxation of same income) and to promote and foster economic trade and investment between the two countries. In India the provisions of the DTAA override the provisions of the domestic statute. Moreover, with the insertion of Sec.90 (2) in the Indian Income Tax Act, the assessee has an option of choosing to be governed either by the provisions of particular DTAA or the provisions of the Income Tax Act, whichever are more beneficial. The Non Resident can certainly take the benefit of the provisions of DTAA entered into between India and the country, in which he resides, more particularly in respect of Interest Income from NRO 5

account, Government securities, Loans, Fixed Deposits with Companies and dividends etc. This is explained below: As all of us are aware that an NRI can open an NRE account, FCNB account or NRO account in any Bank in India. While the interest earned on NRE and FCNB accounts are Tax-free, the interest earned on NRO accounts are taxable and subject to TDS (Tax Deducted at Source) as per Government regulations. TDS is deducted from NRO interest income irrespective of the amount of interest .Unlike a domestic deposit holder the NRIs cannot avoid TDS by presenting form 15G or15H . The rate of TDS is 30% plus education cess (at present 3% of the tax). Total effective tax will be 30.90%. If total income (interest in this case) is more than10 lacs then additional 10% of the tax should be deducted as surcharge (total-33.99%). However under DTAA the NRI has to pay tax at the rate prescribed in the DTAA with the country where Non Resident resides . Under DTAA the reduced rates of tax will be country specific. 15% with Australia, Canada, USA, UK 12.50% with UAE 10% with KSA, Kuwait, Qatar and Oman The benefit of the DTAA is available if the followed conditions are fulfilled : i) The recipient is a non-resident under the IT Act; and ii) The recipient is a tax resident of the foreign country in terms ofthe DTAA between India and the foreign country and is entitled to the benefits of DTAA. So to avail of the benefit under the DTAA, the non resident should submit a declaration stating that he is a non-resident under the Income Tax Act and is entitled to the benefits of the DTAA. This should be supported by a Tax Residency Certificate issued in favour of the non resident by tax authorities of the foreign country stating that the he is a tax resident of the concerned foreign country and is entitled to the benefits of the DTAA between India and the foreign country. Such declaration and Tax Residency Certificate should be submitted each year. Remember TDS and Tax Liability are two different things. If the TDS is more than the tax liability then , NRIs can file income tax return along with TDS certificate (with or without DTAA) from Bank through any Chartered Accountant or directly and claim refund of excess tax. So TDS deducted over and above normal applicable tax can be claimed back. To see the list of DTAA countries and TDS rates please visit our website http://www.sbi.co.in/webfiles/uploads/files/1311585986837_DTAA_COUNTRY_LIST.pdf A feedback from our NRI Branch Trivandrum customer The Chief Manager and the relationship Manager were very courteous and extremely helpful in giving me very competent professional advise. I am very grateful to both of them. - Dr. S.G. Appan, Phd.

Your Feedback is important to us. We cordially invite your suggestions and views to improve our products and quality of services. Please write to Smt. Smitha S. Nair, NRI Nodal Officer, at nri.lhotri@sbi.co.in . Please also visit exclusive portal of our Bank for NRIs at www.onlinesbi.com/nri for more information on our products and services. Disclaimer: This Newsletter has been brought out with the sole intention of disseminating useful information to NRIs and does not purport to be a legal document or a solicitation. In case of any variation between what has been stated herein and the relevant Acts, Rules & Regulations, Policy Statement, Banks instructions. etc, the latter shall prevail.

In the coming issues . . . Investment avenues for NRIs Health tips Ribus Puzzles NRI Quiz 6