Indian banking, NRI, NRO, FCNR, NRE, RFC, account info
|NRI : Non Resident Indians
|OCB :Overseas Corporate Bodies
|RBI: Reserve Bank of India
|NRE :Non Resident (External a/c)
|FCNR : Foreign Currency Non Resident a/c
What types of Bank accounts can an NRI open in India?
The various types of Bank Accounts an NRI can open are:
(i) Ordinary Non-Resident Rupee (NRO) Account:
NRIs can open NRO account for transactions in rupees without any approval. It can be maintained in the nature of current, savings, recurring or fixed deposit account. NRIs may also open this account jointly with residents. After the person returns to India permanently, this account can be
again designated as a resident account.
(ii) Non Resident (External) Rupee Accounts (NRE A/C)
NRE account may be opened without any approval if the funds for this account are transferred in freely convertible foreign currency. NRIs may jointly open this account with another NRI. This account can be maintained in the form of saving or current or recurring or fixed deposit account. Balances held in this account and any interest earned on this account are exempt from tax.
(iii)Foreign Currency (Non Resident) Account (FCNR A/C)
FCNR A/C is maintained only in term deposit. The account can be maintained only in
Pound Sterling, U.S. dollar, Deutsche Mark and Japanese Yen. The deposit is accepted for a period not below six months and not above three years. Remittance from abroad is to be made in the foreign currency in which the account is desired to be maintained. The balances and the interest on this account are exempt from tax .
(iv) Non Resident (Non Repatriable) Rupee Deposit Scheme -NR-NR-RD Scheme:
NRIs can invest through this scheme in term deposit maintained out of the funds transferred in India in freely convertible foreign currency through proper banking channels.
This account is however, maintained in Indian rupees. The deposits can be for a period ranging from 6 months to 3 years.
Are there any provision of repatriating the money held in the bank accounts in India?
Yes, the balances lying in the following accounts can be repatriated anytime outside India:
(i) NRE account holders can not only repatriate the account held in this account but also the interest accrued on this account.
(ii)Balances in NRO account can be remitted abroad with the permission of RBI. However, only the funds received from abroad can be
repatriated. It may be noted that normally this account is used for depositing the local funds/incomes of NRI.
(iii) The balances held in NR-NR-RD a/c cannot be repatriated abroad but the interest accrued on this account is permitted to be repatriated.
Can an NRI returning to India keep his money in Bank accounts abroad?
A. Yes, NRIs returning from abroad after a continuous stay of at least one year can maintain their bank accounts abroad. They can deposit all income earned abroad while they were resident there. Also any income earned on any asset (immovable or not) acquired while staying abroad can be deposited in this account. Moreover, any pension received by such person from the erstwhile employers can also be deposited in this account. Any fresh credit to such account can be made only if it is out of foreign currency acquired from the above mentioned sources.
Can an NRI returning to India deposit his income earned outside India in the Bank?
Yes, any NRI returning to India can deposit his income earned outside India in the Resident Foreign Currency Account (RFC A/C), although if the NRI decides, he can retain his income outside India .
Under this scheme NRIs who were resident outside India for a continuous period of at least one year and have become resident after returning back to India are permitted to maintain this account in any freely convertible foreign currency for depositing his income earned outside India .(For details see relevant question above)
The following amounts can be deposited in the RFC A/C -
(i) Balances in Bank accounts outside India and interest thereon.
(ii) Dividend, interest, profit earned on investment in foreign currency in the form of shares or securities.
(iii) Rent etc. earned from Immovable property outside India.
(iv) Foreign exchange earning through employment, business or vocation outside India which was taken up while stay abroad.
Can NRI invest in shares and debentures of an Indian Companies?
YES, NRIs can invest in the new issue of shares and debentures of Indian companies. NRIs can subscribe to new issue of equity/preference shares/debentures under different percentage schemes approved by RBI .As per the percentage scheme the total percentage of issue to NRIs/OCBs should not exceed the specified limit. Different percentages are specified for companies engaged in different areas:
(i) For Hospitals & Hotels - specified percentage is 40 %
(ii)For companies engaged in hire purchase, leasing etc. - the specified percentage is 24%.
(iii)For industries engaged in export trading activities,
Housing & Real Estate development and Air Taxi operation - the specified percentage is 100%
The amount invested and interest on that amount can be repatriated if the required conditions are fulfilled. Moreover, NRIs can also purchase both old and new shares of sick industrial units for its revival. They can also purchase shares of Public Sector Enterprise (PSE)
Can NRIs invest in the Mutual funds schemes?
Yes, NRIs/OCBs can invest in domestic mutual funds on repatriation basis. NRIs/OCBs can also invest in Mutual funds floated by public and private sector mutual funds on non-repatriation basis by giving a separate application in RBI. No separate approval for the same is required .
Similarly, they can also invest in Money Market Mutual Funds (MMMFs) floated by commercial banks and other financial institutions. No separate permission is required.
Can an NRI place deposits with the companies?
Yes, NRIs/OCBs can place funds in fixed deposits with public limited companies in India. If the permission to accept deposit from non-residents is already being taken by Indian company, it is not necessary for the investor to take separate permission.
The investment can be done with full repatriation benefits for a period of three years.