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NRI Bank Accounts

Banks offer two types of accounts to NRIs, based on their repatriablity.

Repatriable Accounts
Funds that can be transferred or repatriated abroad are maintained in a Non Resident External Bank account. Generally, funds remitted from outside India are credited to this account. Investments made from foreign funds can be repatriated overseas, and such investments are maintained in a Repatriable Demat account.

Non-Resident (External) Rupee (NRE) Accounts

  • Both Principal and Interest can be repatriated/transferred out of India
  • Savings rate on NRE accounts is at par with savings rates in resident accounts
  • Term deposits can be made for 1 to 3 years.
  • The interest rates on (NRE) Term deposits cannot be higher than LIBOR/SWAP rates as on the last working day of the previous month, for US dollar of corresponding maturity plus 50 basis points.

The interest rates on three year deposits also apply in case the maturity period exceeds three years. The change in interest rate also applies to NRE deposits renewed after their present maturity period.

FCNR (B) Accounts
  • As in NRE accounts, both principal  and interest are repatriable.
  • Presently, deposits can be made in 6 specific foreign currencies (US Dollar, Pound Sterling, EURO, Japanese Yen, Australian Dollar and Canadian Dollar).
  • Interest rate- Fixed or floating within the limits of LIBOR/SWAP rates for the respective currency/corresponding term minus 25 basis points (except Japanese Yen).
  • The term of deposits can range between 1 to5 years.
NRO Accounts
  • Only current earnings are repatriable.
  • Savings NRO accounts are normally operated to credit rupee income from shares, interest, rent from property in India, etc.
  • In case of term deposits, banks are allowed to determine their own interest rates.

Banks can allow remittance upto USD 1 million per financial year for bonafide purposes from balances in the NRO accounts once taxes are paid out. This limit includes the sale proceeds of immovable properties held by NRIs and PIOs.

Resident Foreign Currency (RFC) Account
NRIs and PIOs returning to India can maintain  an RFC account with an authorized bank in India to transfer funds from their NRE/FCNR (B) accounts. Proceeds of assets held outside India before their return to India can be credited to the RFC account. These funds are free from all restrictions as to their utilization or in investment in any form outside India.

Non-Repatriable Accounts
Non-repatriable funds are those which cannot be taken out of India. These have to be maintained in a separate bank account i.e. a Non Resident Ordinary Bank account.
Investments made from non-repatriable accounts cannot be repatriated but have to be  maintained in a Non-Repatriable Demat account. Money once transferred from an NRE account to an NRO account cannot be transferred back to an NRE account.

Non Resident Ordinary (NRO) Account

  • When a resident becomes an NRI, his existing savings account is designated as a Non-resident Rupee (NRO) account.
  • The NRO accounts could be maintained in the nature of current, saving, recurring or term deposits. NRIs can also open NRO accounts for depositing their funds from local transactions.
  • The interest earned from NRO accounts is accountable to tax laws.
  • NRO accounts can be opened in the name of NRIs who have left India to take up employment or business temporarily or permanently in a foreign country.
  • Funds from NRO accounts are not repatriable or transferred to NRE accounts without the prior approval of the RBI.

However, NRIs, PIOs, Foreign Nationals, retired employees or non-resident widows of Indian citizens can remit, through the Authorised Dealer, up to USD one million per calendar year from the NRO account or from income from sale of assets in India.


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