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  • FAQ - NRI Accounts - NRE NRO FCNR


    Q : What types of bank accounts can be opened by NRIs/OCBs in India?
    A : NRIs/OCBs can open the following types of accounts with banks in India, which hold authorized dealer licenses, as also other banks, specifically authorized by the Reserve Bank to maintain accounts in the names of NRIs/OCBs.
    • Rupee Accounts
    • Non-Resident (Ordinary) Account - NRO A/c.
    • Non-Resident (External) Rupee Account - NRE A/c.
    • Foreign Currency Accounts
    • Non-Resident (Foreign Currency) Account - FCNR A/c
    • (in Pounds, Sterling, US Dollars, Japanese Yen and Euro).
    Q : What are the special features of each account?
    A : The special features are as under:
    NRO A/c.: The funds, standing to the credit of this account, cannot be repatriated outside India in foreign exchange, without prior permission of the Reserve Bank of India. Interest, earned on these accounts, is, however, eligible for repatriation outside India, net of Indian taxes. The remittance of interest (net of taxes) will be permitted by the authorized dealer, where the account is maintained, if the account holder makes an application to the authorized dealer, in the prescribed form. No RBI permission is required for remittance of interest.
    NRE A/c.: The funds, standing to the credit of this account, as well as interest earned thereon, are remittable outside India in free foreign exchange, without permission of the RBI. The interest income is not subject to Indian Income-tax. Credits to the accounts should be in the form of remittance in foreign exchange from outside India, as well as other funds, which are eligible to be remitted outside India, in free foreign exchange. Funds, emanating from local sources, are not eligible to be credited to these accounts, unless these funds are otherwise remittable outside India, in terms of the existing Exchange Control Regulations.
    FCNR A/c.: These accounts can be opened in four foreign currencies:
    • Pounds Sterling;
    • US Dollars;
    • Japanese Yen;
    • Euro.
    Q : What is the distinction among NRE account and NRO account? 
    A : Balances held in NRE accounts can be repatriated abroad freely, whereas funds in NRO account are not generally repatriable. Repatriation of balances held in NRO accounts is allowed subject to certain conditions. Funds remitted from abroad or local funds which can otherwise be remitted abroad to the account holder can be credited to NRE accounts. Funds due to the non-resident account holder which do not qualify, under the Exchange Control regulations, for remittance outside India are required to be credited to NRO accounts. The interest income earned on NRO attracts income tax deduction at source.
    Q : Can I open these accounts with any Bank in India?
    A : No. Only those banks holding an Authorized Dealers' license or banks specially authorized in this regard by the Reserve Bank of India (RBI) are permitted to open these accounts on behalf of NRIs.
    Q : What are the different types of rupee accounts permitted to be maintained?
    A : Three types of rupee accounts Viz. Non-resident (External) Rupee Accounts (NRE account), Ordinary Non- resident Rupee Account (NRO accounts ) and Non-resident (Non-repatriable) Rupee Deposit accounts (NRNR) are permitted to be maintained.
    Q : Can NRO/NRE accounts be maintained by NRIs jointly with residents?
    A : NRO accounts can be held jointly with residents. However, NRE accounts cannot be held jointly with residents. It can be held jointly only with NRIs.
    Q : Can NRE accounts be opened by the power of attorney holder in India on behalf of a non-resident?
    A : No.
    Q : What are the conditions regarding repatriation of balances in NRO accounts?
    A : Repatriation is allowed up to US dollars 1 million per calendar year for any purpose from the balances in NRO accounts subject to payment of applicable taxes.The limit of US dollars 1 million includes sale proceeds of immovable properties held by NRIs/PIOs for a period of 10 years.In case a property is sold after being held for less than 10 years, remittance can be made if the sale proceeds have been held by the NRI/PIO for the balance period.
    Q : Can proceeds of foreign currency notes/travelers cheques be credited to NRE accounts without any restriction?
    A : Authorised dealers have been permitted to credit the proceeds of foreign currency notes/travelers cheques brought by the account holder from abroad during his visit to India provided they are tendered in person. Where the amount of foreign currency notes tendered exceeds U.S.$5000 or its equivalent or the total amount of currency notes and travelers cheques tendered for credit to NRE accounts exceeds US $ 10,000 or its equivalent, it should have been declared to the Customs on the Currency Declaration Form (CDF) at the time of the account holder's arrival in India.
    Q : Can an NRI authorise a close relative to operate his NRE account?
    A : Yes, by giving a Letter of Authority in the specified format to the Branch in which he is having his account. The authority to operate the account is only for local disbursements. The close relative who is authorised will not have the power to make gifts, transfer the account or close the account.
    Q : Can NRO/NRE accounts be maintained by NRIs jointly with residents?
    A : NRO accounts can be held jointly with residents. However, NRE accounts cannot be held jointly with residents. It can be held jointly only with NRIs.
    Q :  What is the benefit of nomination?  
    A : Nomination is a facility that is provided for under banking rules in India. An account holder is permitted to nominate one person who will receive the money of his account after his life time. We strongly recommend that nomination  be registered in respect of accounts in India in order to avoid legal hassles in settlement of balance later when the account holder is no more. Remember, each account requires separate nomination.  Before your send the Nomination Form  to the branch in India please ensure that it is witnessed by a friend, relative or colleague. This is important.     Normally a `will' would take care of your estate. However a will registered in USA may run into procedures while being enforced in India. Hence it is advisable to have nomination registered in respect of each of your accounts even if you have drawn a `will' in USA.  We recommend that you study the regulations concerning probate in both the US and India or that you seek legal advice before deciding on a course of action.
    Q : How should an account under the non-resident Non- repatriable (NRNR) Rupee Deposit Scheme be opened?
    A : Such an account can be opened with an authorised dealer in India by remitting funds from abroad in any convertible foreign currency. Under the NRNR Scheme, deposits designated in rupees can be kept for periods ranging from 6 months to 3 years. NRIs can also open such accounts by transferring funds from their existing NRE/FCNR accounts. No penal interest is chargeable for premature withdrawal of NRE/FCNR deposits for the purpose of making investments in the scheme. if the deposit is to be kept with the same authorised dealer.
    Q : What is the rate of interest payable on NRNR deposits?
    A : Banks are free to determine the interest rate under this Scheme.
    Q : Can the principal or the interest accrued on NRNR deposits be repatriated outside India at any time?
    A : The principal amount of the deposit is not eligible for repatriation . Interest earned upto 30th September 1994 is also not eligible for repatriation. Interest earned for the period beginning 1st October 1994 is,however,eligible for repatriation.or can be utilised for opening fresh NRE/FCNR deposits, or can be credited to existing NRE accounts.
    Q : Can the principal together with the interest accrued on NRNR deposits be renewed, on maturity?
    A : Only the principal amount of deposit could be renewed under the scheme upto 30th September 1994. However, since interest accrued for the period from 1st October 1994 is repatriable, the principal amount together with interest accrued for the period from 1st October 1994 can be renewed under the scheme.
    Q : Can loans/overdrafts be availed of against the security of these deposits?
    A : Yes Authorised dealers are permitted to grant loans/overdrafts for purposes other than investment.
    Q : How do I renew my NRE / FCNR / NRO fixed deposit?
    A : These deposits are automatically renewed by the branch in India for the same period. In case you want a change in period or amount you will have to write to the Indian branch.
    Q : Are NRO/NRE account holders eligible for loans/overdrafts against their fixed deposits?
    A : Yes. except for the purpose of relending, carrying on agricultural/plantation activities or for investment in real estate business. Loans against NRE fixed deposits can, however, be utilised for investments in India on non-repatriation basis, in certain specified areas and for acquisition of flats/houses subject to prescribed conditions.
    Q : What is the status of NRO/NRE accounts on the return of the account holder to India?
    A : Banks redesignate such accounts as resident accounts on return of the account holder to India.
    Q : Does the account holder suffer any loss of interest on such redesignation of accounts?
    A : No. bank pay interest at the contracted rate till the maturity of the deposit if the deposit is held for the full term even after conversion into resident rupee account.