FAQs
| Particulars | Foreign Currency (Non-Resident) Account (Banks) Scheme [FCNR (B) Account] | Non-Resident (External) Rupee Account Scheme [NRE Account] |
Non-Resident Ordinary Rupee Account Scheme [NRO Account] |
|---|---|---|---|
| Who can open an account? | NRIs (individuals / entities of Bangladesh/ Pakistan nationality/ ownership require prior approval of RBI) | NRIs (individuals / entities of Bangladesh / Pakistan nationality/ownership require prior approval of RBI) | Any person resident outside India (other than a person resident in Nepal and Bhutan). Individuals / entities of Bangladesh / Pakistan nationality / ownership as well as erstwhile Overseas Corporate Bodies require prior approval of the Reserve Bank. |
| Joint account | In the names of two or more non-resident individuals, provided all the account holders are persons of Indian nationality or origin. With recent changes in regulations, resident Individual can be joint holder to the account@ | In the names of two or more non-resident individuals, provided all the account holders are persons of Indian nationality or origin. With recent changes in regulations, resident Individual can be joint holder to the account@ | May be held jointly by residents |
| Eligible Credits | Proceeds of Remittance to India in any permitted currency received through normal banking channel | Proceeds of Remittance to India in any permitted currency received through normal banking channel | Local accruals & proceeds of Remittance to India in any permitted currency received through normal banking channel |
| Nomination | Permitted | Permitted | Permitted |
| Currency in which account is denominated | Pound Sterling, US Dollar, Japanese Yen, Euro, Canadian Dollar and Australian Dollar | Indian Rupees | Indian Rupees |
| Repatriablity | Repatriable | Repatriable | Not repatriable except for the following: i) current income ii) up to USD 1 (one) million per financial year (April-March), for any bonafide purpose, out of the balances in the account, e.g., sale proceeds of assets in India acquired by way of purchase/ inheritance / legacy inclusive of assets acquired out of settlement subject to certain conditions |
| Type of Account | Term Deposit only | Savings, Current, Recurring, Fixed Deposit | Savings, Current, Recurring, Fixed Deposit |
| Period for fixed deposits | For terms not less than 1 year and not more than 5 years | At the discretion of the bank | As applicable to resident accounts |
| Tax Exemption | Interest earned and balance in FCNR exempted from Income / Wealth Tax@ | Interest earned and balance in NRE exempted from Income / Wealth Tax@ | Income / Wealth taxes is levied @ 30% + surcharge. Concession, if any, is subject to DTAT (double tax avoidance agreement) with certain countries@ |
| Rate of Interest | Subject to cap as stipulated by the Department of Banking Operations and Development, Reserve Bank of India: At present, with effect from the close of business on 23rd November 2011, interest shall be paid within the ceiling rate of LIBOR / SWAP rates plus 125 basis points for the respective currency/ corresponding maturities. On floating rate deposits, interest shall be paid within the ceiling of SWAP rates for the respective currency / maturity plus 125 basis points. For floating rate deposits, the interest reset period shall be six months. |
Subject to cap as stipulated by the Department of Banking Operations and Development, Reserve Bank of India: Fixed/ Recurring Deposits At present, with effect from the close of business on 16th December 2011, interest rates on NRE deposits have been deregulated and banks have freedom to offer rates of interest – however with the stipulation that the rates offered on NRE deposits will be in line with the domestic deposit interest rate and no deviation from the local/NRO rate of Interest is permited. Savings Bank Account Interest rate shall be at the rate applicable to domestic savings account. Currently, the rate is 4% per cent. |
Fixed/ Recurring Deposits Banks are free to determine interest rates for term deposits. Savings Bank Account Interest rate shall be at the rate applicable to domestic savings account. Currently, the rate is 4% per cent. |
| Operations by Power of Attorney in favour of a resident by the non-resident account holder | Operations of the account in terms of Power of Attorney is restricted to withdrawals for permissible local payments or remittance to the account holder himself through normal banking channels. | Operations of the account in terms of Power of Attorney is restricted to withdrawals for permissible local payments or remittances to the account holder himself through normal banking channels | Operations of the account in terms of Power of Attorney is restricted to withdrawals for permissible local payments in rupees, remittances of current income to the account holder outside India or remittances to the account holder himself through normal banking channels. Remittance is subject to the ceiling of USD 1(one) million per financial year. |
| Loans a. In India i) to the Account holder i) to Third Parties |
Permitted only up to 100 lakhs INR Permitted only up to 100 lakhs INR |
Permitted up to 100 lakhs INR Permitted up to 100 lakhs INR |
Permitted subject to the extant rules@ Permitted, subject to conditions @ |
| b. Abroad i) to the Account holder ii) to Third Parties |
Permitted (Provided no funds are remitted back to India and are used abroad only)@ Permitted (Provided no funds are remitted back to India and are used abroad only) @ |
Permitted (Provided no funds are remitted back to India and are used abroad only)@ Permitted (Provided no funds are remitted back to India and are used abroad only) @ |
Not Permitted Not Permitted |
| c. Foreign Currency Loans in India i) to the Account holder ii) to Third Parties |
Permitted up to 100 lakhs INR Not Permitted |
Not Permitted Not Permitted |
Not Permitted Not Permitted |
| Purpose of Loan a. In India i) to the Account holder |
i) Personal purposes or for carrying on business activities * ii) Direct investment in India on non-repatriation basis by way of contribution to the capital of Indian firms / companies iii) Acquisition of flat / house in India for the person’s own residential use. (Please refer to para 9 of Schedule 2 to FEMA 5). |
i) Personal purposes or for carrying on business activities* ii) Direct investment in India on non-repatriation basis by way of contribution to the capital of Indian firms / companies. iii) Acquisition of flat / house in India for the person’s own residential use. (Please refer to para 6(a) of Schedule1 to FEMA 5). |
Personal requirement and / or business purpose* |
| ii) to Third Parties | Fund based and / or non-fund based facilities for personal purposes or for carrying on business activities * (Please refer to para 9 of Schedule 2 to FEMA 5). | Fund based and / or non-fund based facilities for personal purposes or for carrying on business activities * (Please refer to para 6(b) of Sch. 1 to FEMA 5) | Personal requirement and / or business purpose * |
| b. Abroad To the account holder and Third Parties |
Fund based and / or non-fund based facilities for bonafide purposes | Fund based and / or non-fund based facilities for bonafide purposes | Not permitted |
* The loans cannot be utilised for the purpose of on-lending or for carrying on agriculture or plantation activities or for investment in real estate business.
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Note:
- When a person resident in India leaves the country for Nepal and Bhutan for taking up employment or for carrying on business or vocation or for any other purpose indicating his intention to stay in Nepal and Bhutan for an uncertain period, his existing account will continue as a resident account. Such an account should not be designated as Non-resident (Ordinary) Rupee Account.
- Authorised Dealers (ADs) may open and maintain NRE / FCNR (B) Accounts of persons resident in Nepal and Bhutan who are citizens of India or of Indian origin, provided the funds for opening these accounts are remitted in free foreign exchange. Interest earned in NRE / FCNR (B) accounts can be remitted only in Indian rupees to NRIs and PIO resident in Nepal and Bhutan.
- In terms of Regulation 4(4) of the Notification No.FEMA.5/2000-RB dated May 3, 2000, ADs may open and maintain Rupee accounts for a person resident in Nepal and Bhutan.
- The regulations relating to the various deposit schemes available to Non-Resident Indians have been notified vide Notification No.FEMA.5 dated 3rd May 2000, as amended from time to time. The relevant Notifications and A.P. (DIR Series) Circulars are available on RBI website [www.rbi.org.in → Sitemap → FEMA → Notifications / A.P.(DIR Series) Circulars]. The Master Circular on Non-Resident Ordinary Rupee (NRO) Account [www.rbi.org.in → Sitemap → Master Circulars] may also be referred to. The details of rate of interest on the various accounts, are available in the "Master Circular on Interest Rates on Rupee Deposits held in Domestic, Ordinary Non-Resident (NRO) and Non-Resident (External) (NRE) Accounts" and "Master Circular of instructions relating to deposits held in FCNR (B) Accounts" issued by our Department of Banking Operations and Development, available on RBI website [www.rbi.org.in → Sitemap → Master Circulars].
- AD (Category – I) banks and authorized banks may credit the proceeds of account payee cheques/ demand drafts / bankers' cheques, issued against encashment of foreign currency to the NRE account of the NRI account holder where the instruments issued to the NRE account holder are supported by encashment certificate issued by AD Category-I / Category-II.
- AD Category – I banks and authorised banks may permit remittance of the maturity proceeds of FCNR (B) deposits to third parties outside India, provided the transaction is specifically authorised by the account holder and the Authorised Dealer is satisfied about the bonafides of the transaction.
1 NRI means a person resident outside India who is a citizen of India or is a person of Indian origin [Regulation 2 (vi) of Notification FEMA 5/2000-RB dated May 3, 2000 viz. Foreign Exchange Management (Deposit) Regulations, 2000].
2 Overseas Corporate Body (OCB) means a company, partnership firm, society and other corporate body owned directly or indirectly to the extent of at least sixty per cent by Non-Resident Indians and includes overseas trust in which not less than sixty percent beneficial interest is held by Non-resident Indians directly or indirectly but irrevocably, which was in existence as on September 16, 2003 and was eligible to undertake transactions pursuant to the general permission granted under Foreign Exchange Management Regulations.
3 Subject to usual norms as are applicable to resident accounts, for personal purposes or for carrying on business activities except for the purpose of relending or carrying on agricultural / plantation activity or for investment in real estate business.
4 Subject to conditions such as (i) the loans shall be utilised only for meeting borrower's personal requirements and/ or business purpose and not for carrying on agricultural/ plantation activities or real estate business, or for relending, (ii) Regulations relating to margin and rate of interest as stipulated by the Reserve Bank from time to time shall be complied with and (iii) The usual norms and considerations as applicable in the case of advances to trade/industry shall be applicable for such loans/ facilities.
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