How to Open a Bank Account in India as a Non-Resident Founder?

The growing economy of India continues to attract many global companies, from large corporations to software startups. Additionally, the country is appearing as a magnet for global entrepreneurs who want to enter its dynamic market.

In this, for non-resident founders, one of the first and vital steps is to open a bank account in India as a non-resident Indian founder. The process is more than visiting a branch. It includes following the RBI guidelines, submitting requested documents, selecting the correct account type, and more. 

Want to know how to open a bank account in India as a non-resident Indian founder? This blog explains how NRIs founder can open a bank account in India. Additionally, it also contains information about the RBI rules and regulations you need to follow. So read on and gather all the details. 

Who is Classified as a Non-Resident Indian Founder?

A non-resident founder can be defined as an entrepreneur or business individual who does not live in India, but he/she is a part of the founding team of the company or are starting a business in the country. According to Indian law, it is vital to determine your category. It is because each has different eligibility and document requirements when opening a non-resident founder bank account. Considering this, it is as follows:

• Non-Resident Indian (NRI): An NRI is an Indian citizen living overseas for business, employment, or any other purpose for more than 182 days in a financial year.
• Overseas Citizen of India (OCI): A foreign citizen of Indian origin holds an OCI card. It grants them permanent residency in India, multiple-entry visas to work, live, and study in the country indefinitely. 
• Foreign National: It is an individual who is not a national or citizen of India and does not have any Indian ancestry. However, seek to invest or start a business in India. 

These are the individuals who qualify as non-resident founders in India. Moving ahead, let's know the RBI guidelines for opening non-resident accounts. 

What Are RBI Guidelines for Opening Non-Resident Accounts?

Under the Foreign Exchange Management Act (FEMA), 1999, the Reserve Bank of India (RBI) regulates specific bank accounts for NRIs, PIOs, and foreign nationals. These are as follows:

• Non-Resident External (NRE) Account: This account type is designed for NRIs to hold and remit their foreign earnings in India. Under this account type, in a permitted foreign currency, from overseas funds are remitted and upon deposit converted into Indian rupees (INR). Additionally, both principal and interest amounts are repatriable without any restrictions. An NRE account is available as a current, savings, or term deposit account.
• Non-Resident Ordinary (NRO) Account: This account is used to manage the Indian earned income of NRIs and foreign individuals. It includes rent, profits from business, or dividends. The funds in these accounts are maintained in Indian currency. However, unlike NRE accounts, these have repatriation limits, i.e., up to 1 USD million per financial year with complete documentation. 
• Foreign Currency Non-Resident Bank [FCNR (B)] Account: It is a fixed deposit account for NRI and PIO to hold their foreign earnings in permitted foreign currency in India. It protects against the risk of exchange rate. Additionally, both principal and interest amounts are fully repatriable.
• Special Non-Resident Rupee (SNRR) Account: This account is for business purposes, allowing NRIs and eligible foreign individuals or entities to conduct INR transactions in India. This account type is designed for specific commercial and business transactions in INR. For instance, investment, trade credits, trade in goods/ services, rather than long-term deposits.

These are the different types of accounts available to open a bank account in India as a non-resident Indian founder. Moving forward, let's look at the steps to open a bank account as an NRI founder. 

Steps-by-Step Process to Open a Bank Account in India as a Non-Resident Indian Founder

Here are the steps to open a bank account in India as a non-resident Indian founder:

• Step 1: Entity Registration
• Before opening a business account in India, NRIs need to establish a legal business presence in India. They can select from different business types, such as limited liability partnership, private limited company, or other entity, with the Ministry of Corporate Affairs (MCA). 
• Step 2: Choose the Right Indian Bank
• Choose an Indian bank that has strong international banking services. Popular bank options include HDFC Bank, Kotak Mahindra Bank, SBI Bank, Yes Bank, and ICICI Bank. When selecting a bank, look for:
• Digital onboarding facilities
• Dedicated NRI or international business desks
• Foreign currency services
• Step 3: Select the Account Type
• Select the correct bank account type as per usage. Considering this:
• Opt for FCNR (B), NRE or NRO accounts for investment and personal remittances.
• Open a current account in the name of the business entity or an SNRR account for specific approved business functions in India. 
• Step 4: Prepare Documents
• To open a bank account in India as a non-resident Indian founder, you generally need:
• Valid passport and visa
• PAN card (compulsory for specific bank account types)
• Overseas address proof
• OCI/ PIO card or Indian origin proof (if applicable)
• Completed KYC forms according to the requirements of the bank
• Registration documents of the business (certificate of incorporation, Memorandum and Articles of Association, and PAN)
• Board resolution authorising account opening
• KYC documents of authorized & directors' signatory
• Notarized or apostilled foreign documents (if applicable)
• Step 5: Complete KYC
• Bank should comply with the Know Your Customer (KYC) norms of the RBIs
• For NRE/NRO Accounts: Some banks offer Video KYC for NRIs, but availability depends on the bank and jurisdiction
• For SNRR or Corporate Current Accounts: Physical verification is often needed.
• Step 6: Application Process
• Visit the bank in person or fix a meeting with a bank representative. Additionally, submit:
• Bank application form
• All verified documents
• Passport-size photographs
• Initial deposit (if needed)
• Step 7: Verification and Compliance Check
• Before opening your bank account, the bank will do an internal verification. It includes:
• KYC checks
• RBI reporting (if foreign funds are included)
• FEMA compliance
• Address verification
• Step 8: Account Activation and Access
• Once the bank approves your bank account opening application, you will get:
• Account number & IFSC code
• Net bank and mobile banking credentials
• Welcome kit, including debit card, chequebook, passbook, etc.
• Step 9: Fund the Account
• After opening a bank account, you need to fund it. Considering this:
• NRE Accounts: Initial funding in these accounts should be done from abroad in foreign currency.
• Business Current Accounts: Funds generally come from the capital contribution of the business founder in compliance with FEMA.
• Step 10: Joint Accounts (Optional)
• NRIs can also open a joint bank account in India. They can open a joint account with their resident close relatives on an "either or survivor" basis. It provides operational flexibility. 

This is how to open a bank account in India as a non-resident Indian founder. Further, with professional assistance, simplify the process of opening an account. Moving forward, let's know what happens if one startup founder is an NRI. 

What If One Startup Founder is a Non-Resident Indian?

When an Indian startup has several founders and one of them is an NRI, the business needs to consider the key regulatory and operational implications. It includes:

• Once incorporated, a business can open a regular Indian bank account. However, any contribution from the NRI should follow the foreign direct investment (FDI) policy rules under the automatic or approval route.
• Additionally, an NRI founder can also act as an authorised signatory on the bank account of the company. However, it is only available till they fulfill the RBI-mandated KCY formalities.
• All foreign investments, like convertible instruments, equity, or others, should be reported to the RBI. You can report through the Single Master Form (SMF) available on the FIRMS portal along with other required filings. It includes FC-GPR (share issuance), FC-TRS (share transfers), and the annual FLA return.
• Any dividends or profits shares attributed to the NRI founders are subject to FEMA and RBI guidelines concerning foreign currency and repatriation settlement.
• Further, companies receiving FDI should also fill out the Foreign Liabilities and Assets (FLA) return annually. It is an additional compliance that helps in foreign shareholding tracking.

The above-mentioned measures certify smooth banking operations, legal compliance, and readiness for future foreign funding. Moving ahead, let's know the impact of having a non-resident Indian founder bank account on the business operations.

Bank Account Impact on Business Operations

Having a non-resident Indian founder bank account or including a non-resident in the company impacts several aspects of operations. It includes:

• Regulatory Compliance: Businesses need to meet the requirements stated in the Companies Act and follow FEMA regulations to open NRI account. It includes frequent reporting to the RBI. Considering this, banks often do enhanced KYC checks and need detailed proof of the fund source.
• Foreign Currency & Cross-Border Transactions: Provided the business with the ability to manage and hold funds in multiple foreign currencies. Additionally, SNRR accounts without delays in currency conversion for cross-border trade enable INR transactions. 
• Repatriation Flexibility: Depending on the type of accounts, you can remit profits overseas with ease or as per stated rules.
• Access to Capital: NRE/ NRO accounts provide foreign investment inflows. It simplifies the remittances for NRIs and capital mobilisation for startups.
• Operational Speed & Challenges: NRE and NRO accounts can be quickly opened with complete documentation. However, corporate current accounts for businesses and companies with foreign stakeholders take longer to process. It is because of the physical verification, notarisation, or bank-specific requirements. 
• Investor Confidence: Having well-structured banking arrangements signals compliance readiness. Additionally, it also boosts the credibility of the business with global investors. 
• Government Support: Policies such as permitting NRIs to open one-person companies make it easy for NRIs to participate directly in the startup ecosystem of India. 

This was all about the impact of having a non-resident Indian founder bank account for businesses. 

Final Thoughts

Lastly, to open a bank account in India as a non-resident founder is a straightforward process if you know your non-resident category, select the right account type, and follow RBI guidelines. Considering this, with the right planning, NRI founders can set up compliant banking, smoothly manage finances, and attract investors. Additionally, repatriate their profits overseas when needed.

Furthermore, if you are seeking assistance with opening a bank account in India, connect with Savetaxs. We offer banking facilities to NRIs across 90+ countries, ensuring you can simply open a bank account in India from your residential country. We are 24/7 available for our clients, so you can contact us any time.