Many NRIs have substantial financial interests and roots in India in the form of inherited property, investments made before becoming an NRI, and even investments made as an NRI for any number of reasons.
All financial investments and decisions require your permission and authority to be carried out legally. Many financial transactions can be carried out digitally, but many of them, especially related to physical property and real estate need your physical presence. Being an NRI puts you in a tight spot when it comes to maintaining your property, selling, or buying it, letting it out, and so on.
Power of Attorney For NRI
With a Power of Attorney (POA) holder standing in for you, you can buy and sell real-estate, physical movable properties, and even get representation at government and financial institutions.
A POA grants the authority to an individual to legally represent you in all legal matters and business transactions, for which the deed has been written. You will be called the principal, donor, or grantor of the POA and the person receiving the authority will be known as the holder, donee, or agent.
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Benefits of Power of Attorney In India
With a POA holder available to step in for you, there is no need to put off the lucrative deal or to come flying to India each time you are needed here. The POA comes in handy if you can trust someone, back in India, to manage your affairs on your behalf.
A Power of Attorney holder can help with:
- Routine operations in NRE/NRO bank accounts
- Issuing cheques
- Giving standing instructions
- Managing real-estate:
- Buying, selling, mortgaging, and renting out
- Managing and repairs
- Payment of local body taxes
- Taking out a home loan or home improvement loan
- Insuring the property
- Entering business contracts and settling claims
- Signing your tax forms and claim settlements.
- Routine financial operations
- Paying insurance premiums and collecting benefits and claims.
- Making deposits, buying bonds, and making investments.
- Dealing with share brokerages and mutual fund houses on your behalf.
Remember that a POA holder cannot open a new bank account or start a new insurance policy on your behalf. The RBI also bars a resident POA holder from repatriating funds outside India. They can, however, deposit funds in your NRE/NRO accounts of the principal.
Types of Power of Attorney For NRI
General Power of Attorney for India (GPA)
A General Power of Attorney is a general-purpose deed granting authority to an individual to take care of almost all legal and financial affairs in India. It grants the holder all rights for all your properties in India. Or it can grant all rights for the listed properties or grant all rights related to handling your banking or financial transactions. A General Power of Attorney for India must be considered when you are absolutely certain that the agent will always act in good faith and in your best interest.
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Special Power of Attorney For NRI (SPA)
If you have a specific requirement or task, then you can grant the Special Power of Attorney for that specific task only. It will automatically become unenforceable once the task is complete, and the power vested is automatically revoked. comes to an end. The SPA protects you from the all-encompassing rights the holder has with a General Power of Attorney and can be a very handy instrument in your hands.
How to execute an NRI Power of Attorney?
The first requirement is a trustworthy person, to manage your properties, carry out legal duties and financial transactions on your behalf. Usually, they are close relatives or friends but can be anyone you trust.
The process to create a POA from your country of residence is straightforward:
- Make two original copies of the Power of Attorney deed on plain paper with applicable terms and conditions. DO NOT sign the copies, as you are required to sign all pages of the deed in the presence of competent authority at an Indian Embassy or Consulate.
- Two local witnesses must also sign the POA at the time you sign the deed at the Embassy/Consulate. If the witnesses are unable to be physically present in the embassy, then you must get their signatures notarized separately.
- Once signed, send the deed by registered post to the holder, or any person, in India at an Indian address.
- In India, the holder, or the person to whom the deed was sent, should get the deed registered at the Registrar/Sub-Registrar/Sub-Divisional Magistrate office, in presence of two witnesses, within the jurisdiction where the property is located, or the place of residence of the holder lies. This must be done within 90 days of receipt of the post.
Documents needed at the Indian Consulate:
- Two original copies of the POA document.
- Original Passport with a copy.
- Local address proof in the country of residence – driving license, work permit, etc.
- Two recent passport-size photographs.
- ID proof of the witnesses. Or, in case the witnesses are not themselves present, then their notarized signatures and notarized ID proof copies.
The delegation of authority does not absolve you from the responsibility and you are ultimately responsible for the actions of the POA holder. Therefore, the following safeguards and caveats can help you navigate the waters rather smoothly:
- To be legally valid, all POA deeds executed in a foreign country must be registered in India.
- POA ceases to be in force if the principal dies, is declared mentally incompetent, or insolvent.
- Granting of POA over property does not mean you have transferred its ownership.
- The POA can accept payment on the principal’s behalf in the principal’s NRE/NRO bank account.
- Clearly define the scope of the powers you are granting to the agent as whatever actions the agent takes within the scope, will be binding on you.
- Always include an indemnity clause in the terms of the POA deed to safeguard against any mala fide actions by the agent.
Must Read – Why NRIs Invest In India?
Life Certificate for POA
Power of attorney India format
I am working on a sample format of power of attorney in India – will soon share that on wiseNRI.
The Power of Attorney acts as an enabler not only for your agent but essentially for you. You do not have to face the stress of managing your Indian assets from a foreign land. To draft Power of Attorney, execute and register it in India, and get advice on how to professionally manage your assets in India you can contact us any time.
Hope this gives you a good idea about the NRI Power of Attorney in India. Please add your experience and questions in the comment section.