Decoding the accounts of NRIs

Particulars

Non-Resident (External) Rupee Account Scheme

[NRE Account]

Foreign Currency (Non-Resident) Account (Banks) Scheme

[FCNR (B) Account]

Non-Resident Ordinary Rupee Account Scheme

 [NRO Account]

Who can open an account?

NRIs and PIOs

Individual/entities of Pakistan and Bangladesh shall requires prior approval of the Reserve Bank of India

Any person resident outside India for putting through bonafide transactions in rupees.

Individuals/ entities of Pakistan nationality/ origin and entities of Bangladesh origin require the prior approval of the Reserve Bank of India.

A Citizen of Bangladesh/Pakistan belonging to minority communities in those countries i.e. Hindus, Sikhs, Buddhists, Jains, Parsis and Christians residing in India and who have been granted LTV or whose application for LTV is under consideration, can open only one NRO account with an AD bank subject to the conditions mentioned in RBI’s Notification No. FEMA 5(R)/2016-RB dated April 01, 2016, as updated from time to time.

Joint account

May be held jointly in the names of two or more NRIs/ PIOs.

NRIs/ PIOs can hold jointly with a resident relative on ‘former or survivor’ basis (relative as defined in Companies Act, 2013). The resident relative can operate the account as a Power of Attorney holder during the lifetime of the NRI/ PIO account holder.

May be held jointly in the names of two or more NRIs/ PIOs.

May be held jointly with residents on ‘former or survivor’ basis.

Currency

Indian Rupees

USD, GBP, EUR, CAD, AUD

Indian Rupees

Type of Account

Savings, Current, Recurring, Fixed Deposit

Term Deposit only

Savings, Current, Recurring, Fixed Deposit

Period for fixed deposits

From one to maximum Ten years

For terms not less than 1 year and not more than 5 years

As applicable to resident accounts.

Permissible Credits

Credits permitted to this account are inward remittance from outside India, interest accruing on the account, interest on investment, transfer from other NRE/ FCNR(B) accounts, maturity proceeds of investments (if such investments were made from this account or through inward remittance).

Current income like rent, dividend, pension, interest etc. will be construed as a permissible credit to the NRE account.

(Only those credits which have not lost repatriable character)

Inward remittances from outside India, legitimate dues in India and transfers from other NRO accounts are permissible credits to NRO accounts.

Rupee gift/ loan made by a resident to a NRI/ PIO relative within the limits prescribed under the Liberalised Remittance Scheme may be credited to the latter’s NRO account.

Permissible Debits

Permissible debits are local disbursements, remittance outside India, transfer to other NRE/ FCNR (B) accounts and investments in India.

The account can be debited for the purpose of local payments, transfers to other NRO accounts or remittance of current income abroad.

Apart from these, balances in the NRO account cannot be repatriated abroad except by NRIs and PIOs up to USD 1 million, subject to conditions specified in Foreign Exchange Management (Remittance of Assets) Regulations, 2016.

Funds can be transferred to NRE account within this USD 1 Million facility.

Repatriability

Fully Repatriable

Not repatriable except for all current income.

Balances in an NRO account of NRIs/ PIOs are remittable up to USD 1 (one) million per financial year (April-March) along with their other eligible assets.

Taxability

Income earned in the accounts is exempt from income tax and balances exempt from wealth tax

Taxable

Change in residential status from Non-resident to resident

NRE accounts should be designated as resident accounts or the funds held in these accounts may be transferred to the RFC accounts, at the option of the account holder, immediately upon the return of the account holder to India for taking up employment or on change in the residential status.

On change in residential status, FCNR (B) deposits may be allowed to continue till maturity at the contracted rate of interest, if so desired by the account holder.

Authorised dealers should convert the FCNR (B) deposits on maturity into resident rupee deposit accounts or RFC account (if the depositor is eligible to open RFC account), at the option of the account holder.

NRO accounts may be designated as resident accounts on the return of the account holder to India for any purpose indicating his intention to stay in India for an uncertain period.

Likewise, when a resident Indian becomes a person resident outside India, his existing resident account should be de