Nominee residence and account location change the route
The death of a foreign-currency account holder does not make every nominee entitled to remit the entire balance abroad through one automatic process. Regulation 7 of the Foreign Currency Accounts Regulations distinguishes three situations. Identify the account’s location, the nominee’s FEMA residence and the established share or entitlement before preparing the bank request. This analysis is checked as of 24 October 2026 against the RBI’s current consolidated regulation.
Use the right branch of regulation 7
| Situation | Regulatory route | Key limitation |
|---|---|---|
| Account with an authorised dealer in India; non-resident nominee | The authorised dealer may remit to that nominee | Only to the extent of established share or entitlement |
| Resident nominee seeking outward payment from their share for deceased’s foreign liabilities | May apply to RBI for the remittance | Application is not automatic permission |
| Resident nominee of an account outside India under regulation 5 | Close the account and bring proceeds to India through banking channels | Do not assume indefinite overseas retention |
The regulation is a foreign-exchange rule. It does not settle disputed succession, probate, beneficial ownership, tax or the bank’s entire deceased-claim procedure. A nomination record is not a substitute for establishing the entitlement on which the proposed foreign-exchange action relies. The numerical cases expressly assume the relevant legal share is already established, so they do not prescribe inheritance percentages.
Distinguish residence from nationality
Record the nominee’s residence under the applicable FEMA framework and the facts needed by the authorised dealer. A foreign passport, Indian citizenship, overseas bank account or mailing address is not by itself the whole residence analysis. Do not select the non-resident route just because payment is desired abroad, or use tax-residency paperwork as an unexplained substitute for the relevant foreign-exchange conclusion.
For a non-resident nominee of an account with an authorised dealer, the word “may” and the entitlement limit matter. Obtain the bank’s documentary requirements and approval of the actual payment rather than promising a guaranteed remittance. If several nominees or estate claimants are involved, reconcile the amount already settled to each before requesting another payment.
A resident nominee’s foreign-liability request needs its own file
Regulation 7(ii) contemplates an RBI application where a resident nominee wishes to remit from their share to meet the deceased’s liabilities abroad. Identify the liability, creditor, currency, evidence and proposed amount. The requested amount should reconcile with the established share and the actual obligation. Do not describe filing an application as permission, or assume a debt is validated merely because an invoice is denominated in foreign currency.
If another independently lawful route is proposed, establish its actual conditions with the bank; do not invent a universal annual allowance or reuse another account category’s permission. The regulation does not state a standard percentage approval, a guaranteed turnaround time or a general automatic grace period after death.
Overseas account closure is a separate obligation
For a resident nominee of an account held outside India in accordance with regulation 5, the regulation calls for closure and bringing the proceeds to India through banking channels. Obtain the overseas bank’s balance, lawful charges, settlement and closure evidence, then reconcile the inward receipt. Keep any separate proposed outward payment distinct from that closure obligation; an unapproved future foreign-liability plan is not by itself authority to retain the overseas account indefinitely.
Reconcile estate balances without creating duplicate entitlements
Use account-level opening balances, substantiated deductions, prior settlements, nominee entitlements and remaining proceeds. Multi-bank holdings require an aggregate control so the same entitlement is not claimed twice. The bank request should identify the exact account and currency, while the legal entitlement file should state whether a share relates to that account or a wider estate. Figures below are USD unless expressly stated otherwise; no exchange rate, tax exemption or inheritance conclusion is assumed.
Worked illustrations
These illustrations use fictional facts and expressly stated assumptions. Amounts are Indian rupees unless a different currency or unit is specified. They are independent examples, not findings about any actual client.
Illustrative example 1: Non-resident nominee’s established share
An Indian authorised-dealer foreign-currency account holds USD80,000. A non-resident nominee’s independently established entitlement is 25%, giving USD20,000. The bank may consider remittance of that entitlement under the applicable route; the USD80,000 balance does not itself authorise remitting all funds to that nominee.
Illustrative example 2: Mixed-residence nominees
An account has USD100,000 and independently established entitlements of 60% to a non-resident and 40% to a resident nominee. Amounts are USD60,000 and USD40,000. The residence-dependent routes must be assessed separately; the non-resident portion does not automatically make the resident USD40,000 freely remittable.
Illustrative example 3: Resident nominee’s foreign liability
Assume the resident nominee has an established USD40,000 share and a substantiated deceased-person foreign liability of USD15,000 to settle from it. The proposed application amount is USD15,000, leaving USD25,000 of the share outside that request. This calculation does not establish that RBI approval has been granted.
Illustrative example 4: Net overseas proceeds
Assume a resident nominee must close a qualifying overseas account with USD50,000, subject to substantiated lawful bank charges of USD500. Net proceeds are USD49,500. Reconcile that amount to the banking-channel inward receipt and closure evidence; the charges and any other deductions require proof.
Illustrative example 5: Two accounts, one allocation control
Assume an established 40% entitlement applies separately to accounts holding USD30,000 and USD20,000. Account entitlements are USD12,000 and USD8,000, total USD20,000. Applying the 40% to each account and then claiming another 40% of the combined balance would duplicate the entitlement.
Illustrative example 6: Prior settlement reduces the remaining request
An independently established entitlement is USD30,000 and USD12,000 has already been validly paid against it. Remaining entitlement is USD18,000. The next request must reconcile that earlier payment; a refreshed bank balance does not recreate the original USD30,000 unpaid entitlement.
Ten-step verification table
| Step | Verification | Evidence to retain |
|---|---|---|
| 1 | Identify the account and governing category | Account location, holder and regulation 5/Indian-bank evidence |
| 2 | Obtain death and claim documents | Death certificate and bank-required records |
| 3 | Establish nominee identity and FEMA residence | Residence evidence and reasoned classification |
| 4 | Establish the legal share or entitlement | Applicable claim, succession and bank documentation |
| 5 | Select the regulation 7 route | Indian-account remittance, RBI application or overseas closure analysis |
| 6 | Verify any foreign liability | Creditor, amount, currency and supporting obligation |
| 7 | Reconcile prior payments and net funds | Account and estate allocation ledger |
| 8 | Obtain necessary bank/RBI decisions | Written permissions and actual terms |
| 9 | Execute through the proper banking route | Settlement, inward/outward and closure evidence |
| 10 | Close the multi-account reconciliation | Final receipts, remaining claims and exception record |
Sixteen practitioner FAQs
1. Does regulation 7 decide inheritance rights?
No. Establish the underlying share or entitlement under the applicable legal and bank process.
2. Is nominee nationality the same as FEMA residence?
No. Residence needs its own applicable factual analysis.
3. Can a non-resident nominee automatically receive the entire account?
The Indian authorised-dealer route is limited to the nominee’s established share or entitlement.
4. Does the word “may” guarantee bank remittance?
No. Complete the bank’s required verification and actual remittance process.
5. Can one nominee’s residence determine every other nominee’s route?
No. Assess each person and entitlement separately.
6. Can a resident nominee use the same outward route without further review?
Regulation 7 provides a distinct RBI-application route for the stated foreign-liability purpose.
7. Is an RBI application the same as approval?
No. Retain the actual decision and comply with its terms.
8. What foreign liabilities should be shown?
The deceased’s actual supported liabilities proposed to be met from the nominee’s share.
9. Is any foreign-currency invoice enough?
No. Verify the creditor, enforceable obligation, amount and purpose.
10. Does this article prescribe a universal remittance allowance?
No. It does not import a percentage, annual allowance or another scheme’s conditions.
11. What must a resident nominee of a qualifying overseas account do?
Close the account and bring proceeds to India through banking channels under the stated rule.
12. Can an unapproved future outward request justify indefinite retention?
Do not assume it overrides the separate overseas-account closure requirement.
13. Are bank charges automatically accepted deductions?
Retain evidence that the charges are lawful and correctly applied to the actual settlement.
14. How are multiple accounts controlled?
Map the entitlement to each account or estate basis and reconcile aggregate settlements without duplication.
15. Do earlier payments reduce the next request?
Yes. Reconcile them against the same entitlement rather than recreating an unpaid balance.
16. Is a tax clearance or succession process fully covered here?
No. Tax, succession disputes and the bank’s broader claim procedure require separate review.
Conclusion
Ground the entitlement, residence and account location first. Keep bank remittance, RBI permission and overseas-account closure as distinct routes, supported by one reconciled settlement file.