FAQ for NRIs - Bank Accounts

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 withauthorised dealers/authorised banks in India?
NRO and NRE accounts can bemaintained in current/savings/ fixed deposit formwhile NRNR accounts can be only in fixed termdeposits.

What are the different types of rupee accounts permitted to be maintained?
Three types of rupee accountsViz. Non-resident (External) Rupee Accounts (NREaccount), 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 currencynotes/travellers cheques be credited to NREaccounts without any restriction?
Authorised dealers have beenpermitted to credit the proceeds of foreigncurrency notes/travellers cheques brought by theaccount holder from abroad during his visit toIndia provided they are tendered in person. Wherethe amount of foreign currency notes tenderedexceeds U.S. $2,500 or its equivalent or thetotal amount tendered i.e. currency notes andtravellers cheques, are in excess of U.S. $10,000or its equivalent, it should have been declaredto the Customs on the Currency Declaration Form(CDF) at the time of the account holder's arrivalinto India. Further, in the case of travellerscheques, they should be presented by the accountholder himself and discharged by him in presenceof the official of the concerned bank.

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

Can resident Power of Attorneyholder operate on the NRE accounts?
Yes, but only for local paymentsto be made on behalf of the account holder, Incases where the account holder or a bankdesignated 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 whichcan otherwise be remitted abroad to the accountholder can only be credited to NRE accounts.Funds which do not qualify, under the ExchangeControl regulations, for remittance outside Indiaare 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 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 gifts tax.

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