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FAQs - NRI Banking


Q1.: What types of bank accounts can be opened by NRIs/OCBs in India?
Q2.: What are the special features of each account?
Q3.: What is the distinction among NRE account and NRO account?
Q4.: Can I open these accounts with any Bank in India?
Q5.: Can NRO/NRE accounts be maintained by NRIs jointly with residents?
Q6.: What are the conditions regarding repatriation of balances in NRO accounts?

Q1.: What types of bank accounts can be opened by NRIs/OCBs in India?
Ans.: 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
  1. Non-Resident (Ordinary) Account - NRO A/c.
  2. 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).

A person, resident in India, who is earning foreign exchange, is also permitted to maintain a Foreign Currency account in India with an authorized dealer bank, to the extent of 50% of such foreign exchange earnings, under the Exchange Earners Foreign Currency Account (EEFC) Scheme.

Q2.: What are the special features of each account?
Ans: 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.

For the purpose of opening an account, remittance in foreign exchange, in the same currency, should be received in India. The accounts can be opened only as fixed deposits, with a minimum maturity of one year and, a maximum maturity of three years. The principal, as well as interest, earned on these accounts, is remittable outside India, in the same currency or, in other convertible currency, as desired by the account holder. The interest, earned on these deposits, is exempt from Indian Income-tax.

Q3.: What is the distinction among NRE account and NRO account?
Ans: 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.

Q4.: Can I open these accounts with any Bank in India?
Ans: 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.

Q5.: Can NRO/NRE accounts be maintained by NRIs jointly with residents?
Ans: 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.

Q6.: What are the conditions regarding repatriation of balances in NRO accounts?
Ans:

  • 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.



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