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NRI Accounts

Person Resident outside

Banks are required to accept
deposits from Persons outside India
(i.e. Non-residents) only in the
manner prescribed under FEMA and
rules and regulations thereunder

Who is a person?
FEMA defines [Sec.2(u)] Person as
Person includes an individual, HUF,
a company, a firm, an association of
persons, body of individuals whether
incorporated or not, every artificial,
judicial person and any
agency/office/branch controlled by
such person

Person resident in India

FEMA Sec. 2(u) includes both individuals and
other entities
To qualify as resident, two conditions:
(i) duration of stay stayed in India for more than 182
days during the last financial year
(ii) purpose of stay stay for employment, business,
vocation or for any other purpose indicating his intention to
stay in India for an uncertain period

Person resident outside India

Person resident outside India - one who

is not resident in India [Sec. 2(w)] of FEMA
(i) Indian citizens staying outside India for
employment/vocation/business/for other purposes
(ii) Foreign citizens who stay outside India
(iii) Entities registered/incorporated outside India


Non resident Indian

A person resident outside India, who is a
citizen of India or is a person of Indian

Person of Indian origin

He is a citizen of any country other than
Bangladesh or Pakistan, if:
1) he held Indian Passport at any time,
2) he or either of his parents or any of his
grandparents was a citizen of India,
3) the person is a spouse of an Indian
citizen or a person referred to 1&2 above.

Accounts in the name of

RBI permission to all ADs three types of
(i) NRO account maintained in rupees all
types of account SB, CA, RD, TD
(ii) NRE account - maintained in rupees all
types of account SB, CA, RD, TD
(iii) FCNR account maintained in any
permitted convertible foreign currency
FC TERM deposits earlier USD, EURO,
JPY, GBP, Canadian $, Australian $


Features of NRO
Any person resident outside India is permitted to open accounts
(including foreign national of non-Indian origin)
Individuals/Entities of Bangladesh/Pakistan nationality/ownership
require approval of RBI
The account is maintained in rupees
Source of funds: existing a/c can be re-designated; inward
remittance/TC/FC, transfer from NRE/FCNR
All types of deposit accounts (SB,CA, TD, RD) can be opened
Jointly with another NRI or resident
Deposits can be accepted for periods in line with domestic
deposits ( 7 days to 10 years)
The balance in the account is repatriable only to the extent
permitted by RBI; ADs permitted to repatriate up to USD 1
million during a financial year

Features of NRO
9. Interest on NRO term deposit and NRO (SB) account is freely
10. Can credit all local income (like rent, dividend, interest, sale
proceeds of investment/assets, foreign inward remittance in
account holders name)
11. Interest earned on NRO deposits is subject to Indian Income
Tax subject to DTAA but exempt from wealth tax/gift tax
12. Nomination facility available
13. Premature closure permitted subject to usual conditions
14. Loans against deposits available to self and third parties
15. To be re-designated as resident account on return from abroad
16. International Credit Cards can be issued

Types of accounts - NRO

Rupee Accounts:
1) Non resident Ordinary account: NRO
-Opened by N R I for domestic expenses.
2)Whenever an Indian leaves the Country for taking up employment abroad his
account will be classified as NRO

Credits into the Account :

1) Remittance : Foreign Currency remittances made by the account holder
2) Local credits: Legitimate dues to the account holder like rent ,dividend,
pension , Interest, etc

Debits to the Account :

1) Towards all local payments in rupees , including for Investment in India, as per R
B I policy
2) Remittances out of the credits in to the account
3)Remittance up to USD 1 (M) per financial year out of or in the N RO account of

Foreign Nationals & NRO

NRO Account ( Current /Savings Bank ) can also be opened for Foreign
Nationals who are on short visit / stay in India
Ex : tourists, business visit, medical treatment, students on study
visits, Embassy Staff, Employees on deputation to India, etc.
Funds remitted from abroad or those obtained from encashment of
forex brought by them can be credited to NRO account
Can freely make local payments by debit to this account
The balance in the account can be repatriated without any reference to
RBI provided the a/c has been maintained for a period not exceeding six
months and there has been no credit of any local funds (except interest)
to the account beyond six months RBI approval required

Non Resident ( External )


Opened only by NRI/PIOs Bangladeshi/Pakistani exceptions

Maintained in rupees SB, CA, RD, TD (Min. 1 year, Max. 3 years)
interest as per domestic rates
Joint Accounts are permitted provided all of them are NRIs ;also with a
resident close relative on F or S basis
Nomination facility resident/non-resident
Premature closure of TD permitted
Loans to self and third parties against deposits to be closed by funds from
abroad only
Closure before one year no interest
Fully exempt from income tax/wealth tax/gift tax
Credits in to the Account:
- Only inward remittance from abroad,
- Transfers from other NRE/FCNR account
- Interest on investments /maturity or sale proceeds of the investments
the investments were made out of the Foreign remittances,
- rent, dividend, pension, interest etc. subject to tax - CAs certificate

NRE account
PA holder can operate NRE account for local payments ,
permitted investments, permitted outward remittance
(to the NRI only)
Debits to the Account:
-Towards Local Payments
- For repatriation to the NRIs,
-For transfer to NRE/FCNR accounts
-For Investments in ,movable/immovable assets etc.
-For any transactions permitted by the RBI,

Temporary Overdrawings
Allowed for a period not exceeding
two weeks up to a limit of Rs. 50000
To be repaid out of inward
remittances/transfer from other NRE,
FCNR accounts

Change of Status
NRO Accounts & NRE Accounts
-May be re-designated as resident accounts once
the account holder returns to the country, with an
intention to settle permanently,
-If he is on short visit , the account will be treated
as NRE only,
NRE balances -May be transferred to RFC account

Foreign Currency Non resident Accounts


Opened by NRIs,
Singly/Jointly with a non=resident/resident close relative on
F or S basis
Nomination facility resident/non-resident
The currency will be any permitted Foreign (freely
convertible) currency -earlier US $, GBP, EURO, JPY, CAD
and AUD
The nature of accounts will be Fixed Deposits for different
periods - Minimum 1 year and above and maximum up to 5
Freely repatriable
Source of funds inward remittance or from balance of
freely convertible rupee account (in NRE account)
Inward remittance in rupees for issue of FCNR TT selling
rate applicable
Loans against deposit to self and third parties in rupees
as well as foreign currencies to be liquidated by funds
from abroad only

Interest : LIBOR/Euribor related - RBI ceiling
-will be paid in Foreign Currencies at the agreed
fully exempt from income tax
Payment of Interest: on 360 days basis
- For deposits up to one year : No compounding
- For deposits above one year: Half yearly
Pre-mature closure - Yes
Forward cover available

Foreign Currency Nonresident

Accounts FCNR
Allowed to continue till date of maturity if NRI returns for
good before maturity date
Can be transferred to RFC account
Rate of Conversion : At TT buying rate as on the date of
maturity or withdrawal (if the depositor wants in rupees)
Loans/ Overdrafts:
-Can be granted against the security of these deposits,
-Repayment has to come from fresh inward remittances,

Resident Foreign Currency

Accounts RFC

Exchange Earners Foreign Currency

Accounts (EEFC),
Residents Foreign Currency Accounts
Resident Foreign Currency ( Domestic )

Resident Foreign Currency

Account RFC

Can be opened by NRI who return to India for permanent settlement and thus
become resident in India

Resident in India can open an account in Foreign Currency out of Forex received
-Pension received ,
-Monetary benefit on account of retirement benefits,
-Conversion of the assets held abroad while he was resident abroad & repatriated to

Utilisation : No restrictions

Limit on holding : No limit on holding,

Types of Accounts:
-Current/ Savings/Term Deposits

Resident Foreign Currency


Introduced since 2002

A resident can open the account with the Foreign Currency received by him in
the following situations:
-payment received for services rendered outside India, while on visit outside
the Country,
-honorarium or gift received from a person not resident in India, or settlement
of lawful obligations,
- honorarium or gift received from a non resident person while on visit abroad,
-Currency received for travel abroad but not spent,

The account will be maintained as current account without ceiling on the

amount held in the account,

EEFC Account
Exchange Earners Foreign Currency Account
Up to 50% of inward remittances
Held in any permitted foreign currency
Singly/Jointly (NRIs/RI & R F or S basis
Maintained as current account
Cheque Book
Can be used for payments outside India (for current
account and permitted capital account transactions)
Amount withdrawn as rupee cannot be reconverted to
FC and re-credited to EEFC account

Foreign Currency
Accounts Abroad
Opened by a foreign national resident
in India/ Indian citizen employed by
a foreign company outside India/in
either case posted outside India can
maintain a FC account with a bank
outside India
Salary 75% in FC, 25% in rupees
subject to Indian Income Tax for
full salary

Investment by Non residents

Investment in the Securities:
There is no limit on NRI purchasing shares/Convertible debentures issued
by an Indian Company on Non -Repatriation basis,
- No limit on investments in non repatriation basis in Govt. securities ,
treasury bills, Mutual Funds
-Payment will be made by inward remittances for such purchases,
Investment in Capital of Partnership & proprietorship:
- Can invest by way of contribution to the capital of these firms ,
Acquisition of immovable Properties:
(NRI are not permitted to invest in Agriculture Land/ Plantation/ Farm land)
- Can acquire /transfer the immovable properties

Investment not

Business of Chit Funds,

Nidhi Company,
Agricultural or plantation activities,
Real estate business ( other than
development of township, construction of
residential/ commercial premises, roads or
bridges) or construction of farm houses,
Trading in transferable Development Rights,