Indian Consulate On-Line

Investment & Other Facilities for Non-Resident Indians

Bank Accounts

General

Rupee Accounts

Foreign Currency Accounts

<- INDOlink <- Consulate Home-Page <- Facilities for NRIs

Question-6: Can accounts be maintained by NRIs with any bank in India ?

Answer:
No. Banks holding authorised dealers' licences (i.e. authorised to deal in foreign exchange) or banks specifically authorised in this behalf by Reserve Bank can only maintain accounts in names of NRIs.

<- Back to Top of Index

Question-7: Has any bank not holding authorised dealers' licence been permitted to maintain accounts of NRIs ?

Answer:
Yes. Certain co-operative/commercial banks (referred to as authorised banks) have been specifically permitted to maintain accounts of NRIs expressed in rupees even though they are not authorised dealers,

<- Back to Top of Index

Question-8: Are NRIs permitted to maintain accounts in rupees and in foreign currency ?

Answer:
Yes. Accounts can be maintained by NRIs, in rupees as well as in foreign currency.

<- Back to Top of Index

Question-9: Can NRIs maintain current/savings/term deposit rupee accounts with authorised dealers/authorised banks in India ?

Answer:
Yes.

<- Back to Top of Index

Question-10: What are the types of rupee accounts permitted to be maintained ?

Answer:
Two types of rupee accounts viz. Non-resident (External)Rupee Accounts (NRE accounts) and Ordinary Non-resident Rupee Accounts (NRO accounts) are permitted to be maintained. (Also see answer to Question-27 regarding accounts under NRNR Scheme).

<- Back to Top of Index

Question-11: Can these accounts be opened by an authorised dealer/authorised bank whithout the prior permission of Reserve Bank ?

Answer:
Yes. Funds for opening of or credit to NRE accounts have, however, to be remitted from abroad or tendered in the form of foreign currency notes, travellers cheques etc. while on a visit to India.

<- Back to Top of Index

Question-12: Can proceeds of foreign currency notes/travellers cheques brought by NRIs during their visit to India be credited to their NRE accounts without any restrictions ?

Answer:
Yes. However, credits exceeding US$ 10,000 or its equivalent representing proceeds of foreign currency notes/travellers cheques will be allowed provided they were declared to the customs in the Currency Declaration Form at the time of entry into India.

<- Back to Top of Index

Question-13: What is the distinction between NRE account and NRO account ?

Answer:
Funds remitted from abroad or local funds which can otherwise be remitted abroad to the account holder, can be credited to NRE accounts. Local funds which do not qualify, under the Exchange Control regulations, for remittance outside India are required to be credited to NRO accounts.

<- Back to Top of Index

Question-14: Can NRO/NRE accounts be maintained by NRIs jointly with residents ?

Answer:
NRO accounts can be held jointly with residents. However, NRE accounts cannot be held jointly with residents.

<- Back to Top of Index

Question-15: What is rate of interest payable on such accounts ?

Answer:
In the case of NRE accounts, the interest rates are fixed by Reserve Bank. Interest rates in the case of NRO accounts are the same as in the case of domestic deposits.

<- Back to Top of Index

Question-16: Are debits and credits to NRO accounts allowed freely by banks maintaining the accounts ?

Answer:
Yes. Debits for local payments are allowed freely. Funds representing legitimate dues of the account holder or proceeds of remittances received from abroad through banking channels are permitted to be credited freely.

<- Back to Top of Index

Question-17: What are the admissible debits and credits to NRE accounts ?

Answer:
Debits for local payments/disbursements are allowed freely. Credits to the accounts of funds emanating from a local source would be permissible only if the funds are of a repatriable nature i.e. are eligible to be remitted abroad.

<- Back to Top of Index

Question-18: Can funds in NRE/NRO accounts be repatriated outside India ?

Answer:
Funds held in NRE accounts can be repatriated abroad freely. Funds held in NRO accounts which would generally be from a local source cannot ordinarily be repatriated outside India. Interest earned on funds in NRO account during the financial year 1994-95 and onwards can, however, be remitted to the extent permitted by Reserve Bank (See Answers to Questions 55 & 56).

<- Back to Top of Index

Question-19: Can funds in NRE/NRO accounts be utilised for payment of air fare to/from/in India of the account holder and/or his dependents ?

Answer:
Yes. Banks maintaining the accounts have been authorised to permit such utilisation. Airlines/shipping companies and their agents have also been permitted to accept payments in rupees from the funds held in NRO/NRE accounts for the purpose.

<- Back to Top of Index

Question-20: Are temporary overdrawings permitted in NRO SB accounts ?

Answer:
Yes. Authorised dealers may allow such overdrawings upto Rs. 1000/- subject to the comdition that the overdrawings together with the interest payable thereon are cleared within a period of two weeks.

<- Back to Top of Index

Question-21: Are NRO/NRE account holders eligible for loans/overdrafts against their fixed deposits ?

Answer:
Yes, subject to the condition that loans against NRO accounts should not be used for relendilng,carrying on agricultural/plantation activities or for investments in real estate business. Loans availed of against NRE deposits can be utilised for investment in India, on non-repatriable basis, in certain specified areas and acquisition of flat/houses subject to prescribed conditions.

<- Back to Top of Index

Question-22: What are the rates of interest charged on such loans and what are the regulations regarding their repayments ?

Answer:
Loans against NRO/NRE accunts will be charged interest at rates applicable to resident accounts. Repayment of loans will have to be made either by adjustsment of the deposits or by fresh remittances from abroad, The loan raised against NRE deposits can also be repaid out of NRO funds but in such cases, the interest would be charged at commercial rate as in force from time to time.

<- Back to Top of Index

Question-23: Is nomination allowed in NRO/NRE accounts ?

Answer:
Yes.

<- Back to Top of Index

Question-24: Is repatriation of funds belonging to non-resident nominees permitted ?

Answer:
No. Funds held in NRO account wil be allowed to be credited to the non-resident nominees's NRO account only and no repatriation of these funds abroad is permitted. Repatriation of funds from the deceased person's NRE account requires specific approval from Reserve Bank.

<- Back to Top of Index

Question-25: Is transfer of funds between NRE accounts maintained by two different acccount holders permitted ?

Answer:
Yes. Authorised dealers can permit transfer of funds from the NRE account of one person to the NRE account of another person for bonafide personal purposes such as personal expenses,education of children, gift etc.

<- Back to Top of Index

Question-26: At what rates are remittances to India by NRIs for credit to NRE/NRO accounts converted into rupees ?

Answer:
Remittances made for credit to rupee accounts (i.e. NRE/NRO accounts) maintained by NRIs are converted at market rate. Similarly, funds in foreign currency accounts i.e. FCNR accounts if converted into rupees will also be converted at market rate,i.e. the rate as determined by authorised dealers on the basis of market forces.

<- Back to Top of Index

Question-27: Is there any scheme under which non-residents other than NRIs can also keep rupee deposits with banks in India ?

Answer:
Yes. Under the Non-Resident (Non-repatriable) Rupee Deposit (NRNR) Scheme. NRIs as well as other non-residents can keep deposits with banks in India.

<- Back to Top of Index

Question-28: How should an account under the Non-Resident Non-Repatriable (NRNR) Rupee Deposit Scheme be opened ?

Answer:
Such an account can be opened with an authourised dealer in India by remitting funds from abroad in any convertible foreign currency. NRIs can also open such accounts by transferring funds from their existing NRE/FCNR accounts. No penal interest is chargeable for premature withdrawl of NRE/FCNR deposits for the purpose of making investment in the scheme.

<- Back to Top of Index

Question-29: For what period deposits under NRNR Rupee Deposit Scheme can be kept ?

Answer:
Under the NRNR Scheme, deposits designated in rupees can be kept for periods ranging from 6 months to 3 years.

<- Back to Top of Index

Question-30: What is the rate of interest payable on NRNR deposits ?

Answer:
These deposits are not subject to the interest rate regulations of Reserve Bank. Hence, banks are free to determine the interest rates under this scheme.

<- Back to Top of Index

Question-31: Can the principal or the interest accrued on NRNR deposits be repatriated outside India at any time ?

Answer:
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.

<- Back to Top of Index

Question-32: Can the principal together with the accrued interest be renewed, on maturity ?

Answer:
Only the principal amount of deposit can be renewed under the scheme. However, if the deposit is withdrawn or invested in any other scheme, it will not qualify for renewal.

<- Back to Top of Index

Question-33: Can loans/overdrafts be availed of against the security of these deposits ?

Answer:
Yes. Authorised dealers are permitted to grant loans/overdrafts for purposes other than investment. C FOREIGN CURRENCY ACCOUNTS

<- Back to Top of Index

Question-34: Can accounts be maintained by NRIs in a foreign currency ?

Answer:
Yes. FCNR accounts maintaianed by NRIs with authorised dealers in India are designated in foreign currencies.

<- Back to Top of Index

Question-35: What are the foreign currencies in which such accounts can be maintained ?

Answer:
FCNR Accounts can be maintained in Pound Sterling, U.S.Dollar, Deutsche Mark and Japanese Yen.

<- Back to Top of Index

Question-36: Are FCNR accounts permitted to be maintained in the form of Current/ Savings Accounts ?

Answer:
No. FCNR accounts can be maintained only in the form of 'term deposit', i.e. a deposit kept for a fixed period of 6 months to 3 years or which is subject to withdrawal or repayment after notice. Interest, on such deposits is, however, payable only if they are kept for a minimum period of six months.

<- Back to Top of Index

Question-37: What is the maximum period of maturity for a FCNR term deposit account ?

Answer:
The maximum period of maturity is three years.

<- Back to Top of Index

Question-38: Is prematured withdrawal of the FCNR term deposit allowed ?

Answer:
Yes. However, this is subject to the levy of a penalty.

<- Back to Top of Index

Question-39: What is the penalty for premature withdrawal of a FCNR deposit ?

Answer:
Interest in such cases is paid at one per cent below the interest rate payable for the period for which the deposit has actually run.

<- Back to Top of Index

Question-40: If a FCNR deposit of 6 months maturity is withdrawn prematurely, would any interest be payable ?

Answer:
No. While the premature withdrawal would be allowed, no interest would be payable.

<- Back to Top of Index

Question-41: Are the interest rates on FCNR deposits liable for periodical revision ?

Answer:
Yes. The rates are based on the rates prevailing in international markets for the currencies concerned for deposits of comparable maturi- ties and are, therefore, liable for change. But deposits will continue to earn the contracted rates till maturity. Interest rates on FCNR deposits are fixed by Reserve Bank from to time.

<- Back to Top of Index

Question-42: What about debits to FCNR accounts for local payments ?

Answer:
Debits for local payments in rupees are allowed freely. As regards debits for investments in India, please see Chapters III and IV.

<- Back to Top of Index

Question-43: Are funds in FCNR accounts freely repatriable abroad ?

Answer:
Yes. Authorised dealers maintaining these accounts would allow repatriation abroad of these funds.

<- Back to Top of Index

Question-44: Is there any other scheme for NRIs to keep their deposits with banks in India designated in a foreign currency ?

Answer:
Yes. Under the Foreign Currency (Ordinary-Non-Repatriable) Deposit Scheme, deposits can be maintained in U.S. dollar for maturity periods of 6 months to 3 years. Interest on such deposits is determined by authorised dealers. Maturity proceeds are allowed to be paid only in rupees in India and cannot be repatriated abroad. Interest earned upto 30th September 1994 is also not repatriable. Interest earned for the period beginning 1st October 1994 is, however, eligible for repatriation. Note: This scheme has since been discontinued from 20th August 1994. Hence, no fresh deposits will be accepted by banks under this scheme nor existing deposits renewed on their maturity.

<- Back to Top of Index

<- INDOlink <- Consulate Home-Page <- Facilities for NRIs

INDOlink, GENIUS, and their respective logos are trademarks of GENIUS Technologies, Inc.