The Foreign Exchange Management Act, 1999 determines
the laws regulating foreign exchange and enlists the various deposit
schemes available to Non-Resident Indians
The types of deposit schemes made available to NRIs are:
FCNR (B) - Foreign Currency (Non-Resident)
Account (Banks) Scheme
NRE Account - Non - Resident (External)
NRO Account - Non-Resident Ordinary Rupee
Account Scheme. All NRIs can open such accounts, with the exception
of individuals residing in Pakistan and Bangladesh, who require
permission from the RBI. Joint accounts of two or more non-residents
and nomination facility are permitted.
While the FCNR (B) is a term deposit only, the NRE and
NRO accounts can be operated as a savings, current, recurring
or fixed deposit account.
As for interest rates, FCNR (B) and NRE are subject to a cap,
and should not exceed the LIBOR/SWAP rates. In the case of NRO
accounts, rates are determined by the banks. The interest rates,
currently at 3.5% apply to a period of 1 to 3 years.
The accounts at dealers (banks) authorized by the RBI accept currencies
in Pound Sterling, US Dollars, Euros and Japanese yen, and except
for the NRO account, can be fully repatriated. From the NRO account,
only the current income up to a maximum of USD 1 million per calendar
year is allowed.
The Indian Government's aggressive strategy to channelise funds
from NRIs has resulted in a 7-8 % increase in NRI deposits and
the latest move by the central bank to hike the repo rate by 25
basis points will not restrain overseas Indians from remitting
money to India.