Remittances, in fact, have become a major component of the forex earnings and gross domestic product (GDP) of the country. However, the banking services in the country are not yet fully geared up to cater to the NRI segment of the market, specially since the RBI has reportedly issued strict guidelines to all banks on funds that come in through transfers from NRI customers into their accounts.

While none of the banks are willing to go on record about these details, many NRI customers complain about delay in services and a lot of background checks that take up a lot of time. An example is the portfolio management services division of a prominent multinational bank in the capital that recently refused to let an NRI customer invest in a fixed deposit from funds in her own non-resident (ordinary) ru-pee (NRO) account.

The customer was informed by a bank official at the branch in Delhi's business district that since the funds had come into the account from overseas, they were considered high-risk and the bank's own headquarters had refused to let the transaction be cleared. The NRO account in question is more than two years old and the customer had provided all relevant documents when opening the account. Many NRI customers have been facing similar problems in the Indian branches of banks with their NRO, non-resident external (NRE) and foreign currency non-resident (FCNR) accounts.

Banks, however, are not willing to accept that there are big delays and lot of red tape involved when it comes to their NRI services. "NRIs can open NRE/NRO accounts with ICICI Bank from overseas or when they are visiting India. In India, the customer is handed over a welcome kit that contains a chequebook, debit card, PIN and internet banking user ID and password, immediately on submission of application forms and documents.

After the customer submitting the duly filled in application form with all requisite documents, the account is activated within two working days. Customers have an option to submit the application form to our overseas branches / representative offices or to branches of our banking subsidiaries that are allowed to source NRI deposits," says Girish Nayak, head, NRI services, ICICI Bank Ltd.

However, often the 'know your customer' (KYC) requirements lead to considerable delays in opening such accounts. The KYC documents are required to establish the customer's identity, address and NRI status. Copy of passport, valid visa, communication address proof and recent passport-size photograph fulfil the KYC requirements.

Says Shiv Khazanchi, MD and head, private banking, Standard Char-tered Bank: "Banks are responsible for funds flowing into customer accounts and need to be sure that they are from legitimate sources. Wire transfer is instantaneous and is the most preferred route for transfer of funds across the globe. Hence, there is a need for preventing terrorists and other criminals from having unfettered access to wire transfers for moving their funds and for detecting any misuse when it occurs.

It is mandatory for banks to get the information of the name & address of the originator, place where an account exists and the number of that account. Plus there are other checks and balances to ensure that the source and use of funds is all above board." ICICI Bank, too, has various control measures in place to lower the risks of money laundering and terrorism financing for all cross border remittances received in NRI accounts. Obviously such checks take up a lot of time and bonafide customers face delays in their day-to-day transactions.

"We believe that risks associated with cross border remittances to NRI accounts are substantially lower as compared with other channels like cash to cash remittances and are mitigated to a great extent by suitable control measures," admits Mr Nayak.

Most NRI customers feel that the banking services that they are offered could be improved even while addressing the security concerns of the country. Says Mr Udai Patel, managing director of Afro-Asian Insurance Services, a financial services company based in the UK, "overseas Indians still find financial transactions very difficult in India.

The governmental agencies should recognise that they need to be more approachable for NRIs who bring in so much of funds into the country through remittances. Often the NRIs are also huge investors in the real estate sector, the government needs to put regulations in place for them.

There are many instances when NRI customers are duped in property deals." Satish Maripuri, COO of US-based IT serv-ices company Lionbridge, too agrees that the process of money transfers by NRIs to India is too cumbersome. "To harness the huge investment potential that NRIs have and the remittances that come from them, the Indian banking system needs to be more streamlined. In fact, it is far easier for expats and NRIs to open bank accounts in China than in India. NRIs can also invest in financial portfolios through Chinese banks very easily," he says.

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