FAQS RELATED TO NRI BANKING
Q: What are the different types of accounts that a NRI can open in India ?
Answer :- NRIs / OCBs are permitted to maintain accounts with authorized banks in India, wherein they can remit the funds from abroad. The following types of accounts can be opened by NRIs:
NRE (non resident external) – this account can be in the form of current / savings / fixed deposits and can be opened only by remittance from abroad or deposit of foreign currency, or by transfer of funds from existing NRE/FCNR accounts. The account is maintained in Indian Rupees. Funds standing in this account are FULLY REPATRIABLE.
FCNR (foreign currency deposit account – not in rupees) – This account is in the form of fixed deposit and is designated in specified currencies, which is pound sterling, US dollar, DM, and Japanese yen thereby insulating the deposits from depreciation in the value of Indian Rupee. The interest rates on these deposits are normally substantially lower than the Rupee accounts. Funds standing in this account are FULLY REPATRIABLE.
NRNR (non resident rupee deposits) – This account is in the form of Indian Rupee fixed deposit. Funds for the purpose of deposit can be remitted from abroad / transferred from existing NRE / FCNR accounts. Premature withdrawal from NRE / FCNR freely allowed for investment in NRNR deposit. Period of deposits from six months to three years. Interest earned is repatriable, but the principal is NON-REPATRIABLE.
RFC (resident foreign currency deposit account) – This account can be opened by NRI who has returned to India after his foreign stay of minimum one year and subsequently ceases to be NRI. Deposits in this account are made by foreign remittances as well as transfer from NRE / FCNR account. This account is maintained in any convertible currency and funds are FULLY REPATRIABLE.
Q: What are the other salient features of NRE, FCNR, NRNR, and RFC accounts?
Answer :- Interest on all above deposits is exempt from Indian income tax. The total balance i.e. principal plus interest is exempt from wealth tax. Gifts made out of the accounts to close relatives of the account holder in India are exempt from gift tax.Loans and advances can be granted against the security of term deposits, subject to certain conditions.Investments can be made by non-residents in permissible securities / shares / debentures / etc. subject to certain conditions. NRO – This account can be in the form of current / savings / fixed deposits.
An existing account of an individual is converted into a NRO account on his/her attaining NRI status. Deposits in this account can be made by way of remittance from abroad or local deposits. Account is maintained in Indian Rupees. Funds standing in this account are NON-REPATRIABLE.
Q. Can NRO / NRE accounts be maintained by NRIs jointly with a resident Indian?
Answer :- NRO account can be held jointly with resident Indians. NRE account cannot be held jointly with resident Indian, however a power of attorney to operate the account can be given by NRI in favour of a resident Indian.
Q. Can the principal or the interest accrued on NRNR deposits be repatriated outside India at any time?
Answer :- 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.