FAQ for NRIs - Bank Accounts, NRE, NRO, FCNR accounts, deposites, interest rates for NRIs, NRI banks

	General Banking Questions
	Can accounts be maintained by NRIs with any bank in India?
	Banks holding authorised dealers' licences (i.e. banks authorised to deal in foreign exchange) or banks specifically authorised in this behalf by Reserve Bank can only maintain accounts in the names of NRIs. 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.
	Are NRIs permitted to maintain accounts in rupees and in foreign currency?
	Yes. Accounts can be maintained by NRIs in rupees as well as in foreign currency. Accounts in foreign currencies can, however, be maintained with authories dealers only.

	Rupee Accounts
	Can NRIs maintain current/savings/fixed deposit rupee accounts with authorised dealers/authorised banks in India?
	NRO and NRE accounts can be maintained in current/savings/ fixed deposit form while NRNR accounts can be only in fixed term deposits.

	What are the different types of rupee accounts permitted to be maintained?
	Three types of rupee accounts Viz. Non-resident (External) Rupee Accounts (NRE account), Ordinary Non- resident Rupee Account (NRO accounts ) and Non-resident (Non-repatriable) Rupee Deposit accounts (NRNR) are permitted to be maintained.

	Can proceeds of foreign currency notes/travellers cheques be credited to NRE accounts without any restriction?
	Authorised dealers have been permitted to credit the proceeds of foreign currency notes/travellers cheques brought by the account holder from abroad during his visit to India provided they are tendered in person. Where the amount of foreign currency notes tendered exceeds U.S. $2,500 or its equivalent or the total amount tendered i.e. currency notes and travellers cheques, are in excess of U.S. $10,000 or its equivalent, it should have been declared to the Customs on the Currency Declaration Form (CDF) at the time of the account holder's arrival into India. Further, in the case of travellers cheques, they should be presented by the account holder himself and discharged by him in presence of the official of the concerned bank.

	Can NRE accounts be opened by the power of attorney holder in India on behalf of a non-resident?
	No.

	Can resident Power of Attorney holder operate on the NRE accounts?
	Yes, but only for local payments to be made on behalf of the account holder, In cases where the account holder or a bank designated by him has been granted permission by Reserve Bank to make investment in India, the Power of Attorney holder (POA) is permitted to operate the account or facilitate such investment. POA holders cannot, however, make gifts from NRE accounts.

	Can Power of Attorney holder credit proceeds of foreign currency notes/bank notes and travellers cheques to the NRE accounts?
	No.

	What is the distinction between NRE account and NRO account?
	Balances held in NRE accounts can be repatriated abroad freely, whereas funds in NRO account cannot be remitted abroad but used only for local payments in rupees. Consequently, funds remitted from abroad or local funds which can otherwise be remitted abroad to the account holder can only be credited to NRE accounts. Funds which do not qualify, under the Exchange Control regulations, for remittance outside India are required to be credited to NRO accounts.

	Can NRO/NRE accounts be maintained by NRIs jointly with residents?
	NRO accounts can be held jointly with residents, However, NRE accounts cannot be held jointly with residents.

	What is the rate of interest payable on such accounts?
	In the case of NRE accounts, the interest rates for deposits up to one year should not exceed Bank Rate minus 2 percentage points. Interest rates on term deposits of over one year are determined by the banks themselves. Interest rates on NRO accounts are fixed as in the case of domestic deposits.

	Are debits and credits to NRO accounts allowed freely by bank maintaining the accounts?
	Yes. Debits for local payments are allowed freely, Funds representing legitimate dues of the accounts holder of proceeds of remittances received from abroad through banking channels are permitted to be credited freely.

	What are the admissible debits and credits to NRE accounts?
	Debits for local payments/investments are allowed freely. Credits to an account, of funds emanating from a local source would be permissible only if the funds are of a repatrible nature i.e. eligible to be remitted abroad.

	Can funds in NRE/NRO accounts be repatriated outside India?
	Funds held in NRE accounts can be repatriated abroad freely. Funds held in NRO accounts which would generally be from a local source cannot be repatriated outside India. Interest earned on funds in NRO accounts during the financial year 1994-95 and onwards can however, be remitted to the extent permitted by Reserve Bank (See Answers to Question 59 and 60).

	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?
	Yes. Banks maintaining the accounts have been authorised to permit such payments, 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.

	Are temporary overdrawings permitted in NRO Savings Bank account?
	Yes. Authorised dealers may allow such overdrawings up to Rs. 1,000/- subject to the condition that the overdrawings together with the interest payable thereon are cleared within a period of two weeks.

	Are NRO/NRE account holders eligible for loans/overdrafts against their fixed deposits?
	Yes. except for the purpose of relending, carrying on agricultural/plantation activities or for investment in real estate business. Loans against NRE fixed deposits can, however, be utilised for investments in India on non-repatriation basis, in certain specified areas and for acquisition of flats/houses subject to prescribed conditions.

	What are the rates of interest charged on such loans?
	While interest on loans up to Rs. 2 lakhs against NRO/NRE fixed deposit accounts will be charged two percent above the rates paid banks for the concerned deposits, repayment of loans will have to be made either by adjustment of the deposits or by fresh remittances from abroad. Banks are free to charge interest on loans above Rs. 2 lakhs.

	Can loans raised against NRE fixed deposits be repaid out of funds in NRO accounts?
	The loans raised against NRE deposits can 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.

	Is nomination allowed in NRO/NRE accounts?
	Yes.

	Is repatriation of funds belonging to non-resident nominees permitted?
	Funds held in NRO account will be allowed to be credited to the non-resident nominee's NRO account only and no repatriation is permitted. Repatriation of funds from the deceased person's NRE account will be permitted by authorised dealers.

	Is transfer of funds between NRE accounts maintained by two different account holders permitted?
	Yes. Authorised dealers can permit transfer of funds from the NRE account of one person to the NRE account of another person for bona fide personal purposes. Transfers by way of gifts are permitted subject to payment of gift tax.

	At what rates are remittances to India by NRIs for credit to NRE/NRO/NRNR accounts converted into rupees?
	Remittances made for credit to rupee accounts (i.e. NRE/NRO/NRNR accounts) maintained by NRIs are converted at market rate.

	Is there any scheme under which non-residents other than NRIs can also keep rupee deposits with banks in India?
	Yes, NRI and other non-residents can maintain NRO rupee accounts as well as keep deposits with banks in India under NRNR Rupee Deposit Scheme.

	How should an account under the non-resident Non- repatriable (NRNR) Rupee Deposit Scheme be opened?
	Such an account can be opened with an authorised dealer in India by remitting funds from abroad in any convertible foreign currency. Under the NRNR Scheme, deposits designated in rupees can be kept for periods ranging from 6 months to 3 years. NRIs can also open such accounts by transferring funds from their existing NRE/FCNR accounts. No penal interest is chargeable for premature withdrawal of NRE/FCNR deposits for the purpose of making investments in the scheme. if the deposit is to be kept with the same authorised dealer.

	What is the rate of interest payable on NRNR deposits?
	Banks are free to determine the interest rate under this Scheme.

	Can the principal or the interest accrued on NRNR deposits be repatriated outside India at any time?
	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.or can be utilised for opening fresh NRE/FCNR deposits, or can be credited to existing NRE accounts.

	Can the principal together with the interest accrued on NRNR deposits be renewed, on maturity?
	Only the principal amount of deposit could be renewed under the scheme upto 30th September 1994. However, since interest accrued for the period from 1st October 1994 is repatriable, the principal amount together with interest accrued for the period from 1st October 1994 can be renewed under the scheme.

	Can loans/overdrafts be availed of against the security of these deposits?
	Yes Authorised dealers are permitted to grant loans/overdrafts for purposes other than investment.

	What is the status of NRO/NRE accounts on the return of the accounts holder to India?
	Banks have been advised to redesignate such accounts as resident accounts on return of the account holder to India.

	Does the account holder suffer any loss of interest on such redesignation of accounts?
	No. Banks have been advised to continue to pay interest at the contracted rate till the maturity of the deposit if the deposit is held for the full term even after conversion into resident rupee account.

	Foreign Currency Accounts
	Can accounts be maintained by NRIs in foreign currencies?
	Yes. Accounts in foreign currencies (FCNR accounts) can be maintained by NRIs with authorised dealers in India.

	What are the foreign currencies in which such accounts can be maintained?
	FCNR Accounts permitted to be maintained in Pound Sterling, U.S. Dollar, Deutshe Mark and Japanese Yen.

	Are FCNR accounts permitted to be maintained in the form of current/savings accounts?
	NO. FCNR accounts can be maintained only in the form of term deposits,l i.e. a deepest kept for fixed period ranging from 6 months to 3 years.

	What is the maximum period of maturity for a FCNR term deposit account?
	The maximum period of maturity is three years.

	Is premature withdrawal of the FCNR term deposit allowed?
	Yes. However, this is subject to the levy of a penalty.

	What is the penalty for premature withdrawal of a FCNR deposit?
	Interest in such cases is paid at one per cent below the interest rate payable for the period for which the deposit is, however, payable only if they are kept for a minimum period of six months.

	If a FCNR deposit of 6 months maturity is withdrawn prematurely , would any interest be payable?
	No. While the premature withdrawal would be allowed, no interest would be payable. For such premature withdrawals the bank may levy penalty as per their discretion.

	Are the interest rates on FCNR deposits liable for periodical revision?
	Yes. The Banks have been permitted to offer interest on such deposits at rates not more than the LIBOR prevailing on the last working day of the previous week for the relevant maturity and currency. Subject to this guideline, banks can offer either fixed or floating rate of interest on such deposits.

	What about debits to FCNR accounts for local payments?
	Debits for local payments in rupees are allowed freely. As regards debits for investments in India, please see Chapters III and IV.

	Are funds in FCNR accounts freely repatriable abroad?
	Yes. Authorised dealers maintaining these accounts would allow repatriation abroad of these funds.
	Can FCNR deposits be held jointly with residents?
	No.

	Is nomination allowed in FCNR accounts?
	Yes.

	Is repatriation of FCNR funds to non-resident nominees permitted?
	Yes. (Also see Answer to Question for repatriation of funds in NRE account above)

	What is the status of FCNR accounts on the return of the account holder to India?
	Banks would treat the deposits held in FCNR accounts as resident deposits but would continue to pay interest at the contracted rate till maturity of the deposit.