Question 1

What accounts can an NRI open in India?

Accepted Answer

NRI may hold bank accounts in India with AD or AD bank. The AD Bank in India may accept deposits from NRI under the following schemes:

Non-Resident (External) account (NRE) Scheme in Indian rupees
Non-Resident (Ordinary) account (NRO) Scheme in Indian rupees
Foreign Currency Non-Resident (FCNR) in Foreign Currency
Special Non-Resident Rupee account (SNRR)

Features of various Deposit Schemes available to NRIs:

Question 2

Can a Bangladeshi / Pakistani national or an entity owned / controlled from Bangladesh / Pakistan have an account in India?

Accepted Answer

Opening of accounts by individuals / entities of Pakistan nationality / ownership and entities of Bangladesh ownership requires prior approval of RBI.

However, authorized dealers may open only one Non-Resident Ordinary (NRO) account for a citizen of Bangladesh or Pakistan, belonging to minority communities in those countries, namely Hindus, Sikhs, Buddhists, Jains, Parsis and Christians, residing in India and who has been granted a Long Term Visa (LTV) by the Central Government

Question 3

NRI holds NRO, NRE and FCNR account with a AD Bank. He intends to add his sister a resident Indian as a joint holder. Is it permissible?

Accepted Answer

Yes. NRO account can be maintained jointly with a resident of India on former or survivor basis. On the other hand, NRE and FCNR accounts can be maintained jointly with resident relative (as per Companies Act) only i.e. a resident non-relative cannot be a joint holder.

Question 4

Whether 2 or more NRI / PIOs jointly hold NRE / NRO / FCNR accounts in India?

Accepted Answer

Question 5

Can the NRI&rsquo;s sister operate his Bank accounts?

Accepted Answer

No, the sister shall be eligible to operate the account only if she is a POA holder as per the instructions of NRI account holder. Operations in FCNR, NRE and NRO account by his sister as a POA holder is restricted to the following:

Withdrawals for permissible local payments including payments for eligible investments subject to relevant compliances
Remittance to the account holder himself (i.e. NRI in this case) through normal banking channels

Question 6

Whether NRO, NRE and FCNR account can be opened by a resident POA holder?

Accepted Answer

No. NRO, NRE and FCNR account cannot be opened by resident POA holder in India on behalf of NRI.

Question 7

Are NRIs permitted to be joint holders in accounts held by resident Indians?

Accepted Answer

Yes. Relatives (as per Companies Act) who are NRIs are permitted to be joint holders in existing / new resident bank accounts with the resident account holder on “Either or Survivor” basis as per the conditions prescribed.

Question 8

Can NRI account holders avail rupee loans in India from Banks against security of funds held in their FCNR and NRE account?

Accepted Answer

Yes. Under FEMA regulations, NRIs can avail loan from Banks for himself or for third party i.e. RI / Firms / Company in India against the collateral of funds held in FCNR and NRE account without any ceiling subject to usual margin requirements. The loan amount can be utilized by NRI only for the following purposes:

Personal purposes or for carrying on business activities. The loans cannot be utilized for the purpose of ‘relending’ or for carrying on agriculture, plantation activities or for investment in real estate business
Capital contribution in Indian firms / companies
Acquisition of flat / house in India for his ‘own’ residential use

Question 9

Can NRI account holders avail rupee loans in India from Banks against security of funds held in their NRO account?

Accepted Answer

Yes. Under FEMA regulations, loan can be availed in favor of the account holder (NRI in this case) or to third party i.e. RI / Firms / Company in India against the collateral of funds held in NRO account the loan can be utilized for personal and business purposes except for the purpose of ‘relending’ or for carrying on agriculture, plantation activities or for investment in real estate business.

Question 10

Can NRIs avail loans outside India against security of funds held in their FCNR / NRE account?

Accepted Answer

Yes, NRIs can avail loan from branches / correspondent bank outside India in his favor or request the branch / correspondent bank outside India to provide loan to a third party outside India. However, the amount shall be utilized for bonafide purposes.

Question 11

Can a NRI overdraw his NRE account?

Accepted Answer

AD Banks may at their discretion / commercial judgment allow over drawings in NRE account up to a limit of Rs. 50,000/- subject to the condition that such over drawings together with the interest payable thereon are cleared / repaid within a period of 2 weeks, out of inward remittances through banking channels or by transfer of funds from other NRE / FCNR account.

Question 12

What are permissible transactions in NRE account and FCNR account?

Accepted Answer

Permissible Credits

Remittances to India in any permitted currency
Personal cheques drawn, traveller’s cheques, bank drafts in permitted currency
Proceeds of foreign currency / bank notes during temporary visit to India subject to the condition (i) the amount was declared on a Currency Declaration Form (CDF), where applicable and (ii) the notes are tendered to the AD in person by the account holder and AD is satisfied that the account holder is a person resident outside India
Transfers from other NRE / FCNR account
Interest accruing on the funds held in the account
Current income in India (subject to tax payment)
Maturity proceeds of any permissible investment originally made from NRE / FCNR account
Refund of share / debenture subscriptions of to new issues of Indian companies if original subscription was made from NRE / FCNR account
Refund of application / earnest money / purchase consideration on non-allotment / cancellation from builder / developer (with interest) provided original payment was made from NRE / FCNR account
Any other credit if covered under general or special RBI permission

Permissible Debits

Local disbursements
Remittances outside India
Transfer to NRE / FCNR account of the account holder or any other person
Investment in shares / securities / commercial paper of an Indian company or for purchase of immovable property in India
Any other transaction if covered under general or special RBI permission

Particulars	FCNR account	NRE account	NRO account	SNRR account
Who can open an account?	NRI & PIO¹	NRI & PIO¹	Any person resident outside India¹	Any person resident outside India (who has business interest in India)
Type of Account	Term Deposit only	Savings, Current, Recurring, Fixed Deposit	Savings, Current, Recurring, Fixed Deposit	Current Account
Nomination	Permitted	Permitted	Permitted	Permitted
Repatriation	Freely repatriable	Freely repatriable	Current income is freely repatriable, provided all taxes are duly paid. Amounts other than current income can be repatriated to the extent of USD 1 million per FY	Repatriable subject to payment of applicable taxes
Taxability on Interest earned	Interest earned exempt under section 10(15) (iv) (fa) of the Act	Interest earned is exempt under section 10(4) of the Act	Interest earned is Taxable. TDS at 30.9% or as per DTAA rate whichever is beneficial, provided mandated documents are submitted	Not an Interest bearing account
Currency	Any permitted currency i.e. Foreign Currency which is freely convertible	Rupees	Rupees	Rupees
Rate of Interest	Rate of interest are in the accordance with the directions issued by the RBI from time to time	Rate of interest are in the accordance with the directions issued by the RBI from time to time	Rate of interest are in the accordance with the directions issued by the RBI from time to time	Rate of interest are in the accordance with the directions issued by the RBI from time to time
Change in residential status from Non-resident to resident	FCNR (B) deposits may be allowed to continue till maturity at the contracted rate of interest, if so desired by the account holder. Authorised dealers should convert the FCNR(B) deposits on maturity into resident rupee deposit accounts or RFC account (if the depositor is eligible to open RFC account), at the option of the account holder	NRE accounts should be designated as resident accounts or the funds held in these accounts may be transferred to the RFC accounts, at the option of the account holder	NRO accounts may be designated as resident accounts on the return of the account holder to India for any purpose indicating his intention to stay in India for an uncertain period. Likewise, when a resident Indian becomes a person resident outside India, his existing resident account should be designated as NRO account	SNRR account may be designated as resident rupee account on the account holder becoming resident

Operations of NRI Bank Account FAQs