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Can accounts be maintained by NRIs with any bank in India?
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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. |
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Are NRIs permitted to maintain accounts in rupees and
in foreign currency?
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Yes. Accounts can be maintained by NRIs in rupees as
well as in foreign currency. Accounts in foreign currencies can, however,
be maintained with authorised dealers only.
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What are the different types of rupee accounts permitted
to be maintained?
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Four types of rupee accounts viz. Non-resident (External)
Rupee Accounts (NRE), Non-Resident (Special) Rupee (NRSR) Account, Ordinary
Non-resident Rupee Accounts (NRO) and Non-resident (Non-repatriable)
Rupee deposit accounts (NRNR) are permitted to be maintained by NRIs.
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Can NRIs maintain current/savings/fixed deposit rupee
accounts with authorised dealers/authorised banks in India?
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NRO, NRE and NRSR accounts can be maintained in current/savings/fixed
deposits form while NRNR account can be only in fixed term deposits.
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Can proceeds of foreign currency notes/travellers cheques
be credited to NRE accounts without any restriction?
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Authorised dealers have been permitted to credit the
proceeds of foreign currency notes/travellers cheques brought by the
account holder from abroad during his visit to India provided they are
tendered in person. Where the amount of foreign currency notes tendered
exceeds U.S.$ 5000/- or its equivalent or the total amount of currency
notes and travellers cheques tendered for credit to NRE accounts exceeds
U.S.$ 10,000 or its equivalent, it should have been declared to the
Customs on the Currency Declaration Form (CDF) at the time of the account
holder's arrival into India. Further, in the case of travellers cheques,
they should be presented by the account holder himself and discharged
by him in the presence of the official of the concerned bank.
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Can NRE accounts be opened by the power of attorney holder
in India on behalf of a non-resident?
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No.
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Can resident Power of Attorney holder operate on the
NRE accounts?
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Yes, but only for local payments to be made on behalf
of the account holder. In cases where the account holder or a bank designated
by him has been granted permission by Reserve Bank to make investments
in India, the Power of Attorney holder (POA) is permitted to operate
the account to facilitate such investments. POA holders cannot, however,
make gifts from NRE accounts.
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Can Power of Attorney holder credit proceeds of foreign
currency notes/bank notes and travellers cheques to the NRE accounts?
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No.
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What is the distinction among NRE account NRSR account
and NRO account?
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Balances held in NRE accounts can be repatriated abroad
freely, whereas funds in NRSR and NRO account cannot be remitted abroad
but have to be used only for local payments in rupees. Consequently,
funds remitted from abroad or local funds which can otherwise be remitted
abroad to the account holder can only be credited to NRE accounts. Funds
due to the non-resident accountholder which do not qualify, under the
Exchange Control regulations, for remittance outside India are required
to be credited to NRO accounts. The accountholders can freely transfer
funds from NRO/NRE/FCNR accounts to NRSR account but transfer of funds
from NRSR account to other accounts of NRI is not permissible irrespective
of the source of funds.
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Can NRO/NRE/NRSR accounts be maintained by NRIs jointly
with residents?
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NRO & NRSR accounts can be held jointly with residents.
However, NRE accounts cannot be held jointly with residents.
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What is the rate of interest payable on such accounts?
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Banks in India have been given freedom to decide interest
rates on all non-resident rupee accounts. However, the rates of interest
on deposits are subject to change as per the directives issued by Reserve
Bank (Department of Banking Operations and Development) from time to
time.
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Are debits and credits to NRO accounts allowed freely
by banks maintaining the accounts?
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Yes. Debits for local payments are allowed freely. Funds
representing legitimate dues of the account holder or proceeds of remittances
received from abroad through banking channels are permitted to be credited
freely. Debits to the accounts for the purpose of investment in India
and credits representing sale proceeds of investments are allowed subject
to the accountholder giving an undertaking at the time of opening the
account to the effect that such investments/disinvestments would be
covered either by the general or special permission of Reserve Bank.
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What are the admissible debits and credits to NRE accounts?
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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 repatriable nature i.e. funds
which are eligible to be remitted abroad.
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Can funds in NRE/NRO/NRSR accounts be repatriated outside
India?
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Funds held in NRE accounts can be repatriated abroad
freely. Funds held in NRO accounts which would generally be from local
source cannot be repatriated outside India. Funds held in NRSR account
also cannot be repatriated. (Please also see Answers to Questions 61
and 62).
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Can funds in NRE/NRO/NRSR accounts be utilised for payment
of air fare to/from and other travel related expenses in India of the
account holder and/or his dependents?
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Yes. Banks maintaining such accounts have been authorised
to permit such payments. Airlines/shipping companies and their agents
have also been permitted to accept payments in rupees.
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Are temporary overdrawings permitted in NRO Savings Bank
accounts?
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Yes. Authorised dealers may allow such overdrawings up
to Rs. 20,000/- subject to the condition that the overdrawings together
with the interest payable thereon are cleared within a period of two
weeks.
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Are NRO/NRE/NRNR account holders eligible for loans/overdrafts
against their fixed deposits?
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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.
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What are the rates of interest charged on such loans?
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The rate of interest on such loans will be as per the
directive issued by Reserve Bank (Department Banking Operations and
Development) from time to time.
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Can loans raised against NRE fixed deposits be repaid
out of funds in NRO/NRSR accounts?
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The loans raised against NRE deposits can be repaid out
of funds held in NRO/NRSR accounts but in such cases, the interest would
be charged at commercial rate in force from time to time.
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Can a third party in India take loans against the NRO
fixed deposit accounts of NRI?
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Yes. Subject to certain conditions.
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Is nomination allowed in NRO/NRE/NRSR accounts?
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Yes.
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Is repatriation of funds belonging to non-resident nominees
permitted?
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Funds held in NRO/NRSR accounts will be allowed to be
credited to the non-resident nominee's NRO/NRSR account only and no
repatriation is permitted. Remittance of funds to the non-resident nominee
from the deceased person's NRE account will be permitted by authorised
dealers.
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Is transfer of funds between NRE accounts maintained
by two different account holders permitted?
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Yes. Authorised dealers can permit transfer of funds
from the NRE account of one person to the NRE account of another person.
Authorised dealers can transfer funds held with them in NRE account
to the account of same person held with another authorised dealer. Funds
held in NRE account can also be transferred to other authorised dealer
for the purpose of opening NRE account in the name of the same person
provided a certificate confirming the NRE status of the account from
which funds are transferred is produced. Transfer of funds by way of
gift can be permitted by authorised dealer after obtaining an undertaking
from the transferee/transferee's bank that gift tax rules/regulations
have been complied with.
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At what rates are remittances to India by NRIs for credit
to NRE/NRO/NRNR/NRSR accounts converted into rupees?
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Remittances for credit to rupee accounts (i.e. NRE/NRO/NRNR/NRSR
accounts) maintained by NRIs are converted at the market rate.
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Is there any scheme under which non-residents other than
NRIs can also keep rupee deposits with banks in India?
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Yes, NRIs and other non-residents can maintain NRO rupee
accounts as well as keep deposits with banks in India under NRNR Rupee
Deposit Scheme.
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How should an account under the Non-Resident Non-repatriable
(NRNR) Rupee Deposit Scheme be opened?
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Such an account can be opened with an authorised dealer
in India by remitting funds from abroad in any convertible foreign currency.
Under the NRNR Scheme, deposits designated in rupees can be kept for
periods ranging from 6 months to 3 years. NRIs can also open such accounts
by transferring funds from their existing NRE/FCNR accounts. No penal
interest is chargeable for premature withdrawal of NRE/FCNR deposits
for the purpose of making investment in the scheme if the deposit is
to be kept with the same authorised dealer.
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Can the principal or the interest accrued on NRNR deposits
be repatriated outside India at any time?
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The principal amount of the deposit is not eligible for
repatriation. Interest earned up to 30th September 1994 is also not
eligible for repatriation. Interest earned for the period beginning
1st October 1994 is, however, eligible for repatriation or can be utilised
for opening fresh NRE/FCNR deposits, or can be credited to existing
NRE accounts.
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Can the principal together with the interest accrued
on NRNR deposits be renewed, on maturity?
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Only the principal amount of deposit could be renewed
under the scheme upto 30th September 1994. However, since interest accrued
for the period from 1st October 1994 is repatriable, the principal amount
together with interest accrued for the period from 1st October 1994
can be renewed under the scheme.
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Can loans/overdrafts be availed of against the security
of NRNR deposits?
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Yes. Authorised dealers are permitted to grant loans/overdrafts
for purposes other than investment.
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What is the status of NRO/NRSR/NRE accounts on the return
of the account holder to India?
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Banks have been advised to redesignate such accounts
as resident accounts on return of the account holder to India.
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Does the account holder suffer any loss of interest on
such redesignation of accounts?
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No Banks have been advised to continue to pay interest
at the contracted rate till the maturity of the deposit if the deposit
is held for the full term even after conversion into resident rupee
account.
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Foreign Currency Accounts
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Can accounts be maintained by NRIs/OCBs in foreign currencies?
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Yes. Accounts in foreign currencies (FCNR accounts) can
be maintained by NRIs/OCBs with authorised dealers in India.
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What are the foreign currencies in which such accounts
can be maintained?
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FCNR Accounts can be maintained in Pound Sterling, U.S.
Dollar, Deutsche Mark (upto December 2001), Euro and Japanese Yen.
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Are FCNR accounts permitted to be maintained in the form
of current/savings accounts?
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No. FCNR accounts can be maintained only in the form
of 'term deposits', i.e. a deposit kept for fixed periods ranging from
6 months to 3 years.
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Is premature withdrawal of the FCNR term deposit allowed?
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Yes. However, this is subject to the levy of a penalty.
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QWhat
is the penalty for premature withdrawal of a FCNR deposit? |
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Interest in such cases is paid at one per cent below
the interest rate payable for the period for which the deposit has actually
run. Interest on deposits is, however, payable only if they are kept
for a minimum period of six months. Incidentally, these matters are
governed by the instructions/directives issued by Reserve Bank (Department
of Banking Operations and Development) from time to time.
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If a FCNR deposit of 6 months maturity is withdrawn prematurely,
would any interest be payable?
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No. While the premature withdrawal would be allowed,
no interest would be payable. For such premature withdrawals the bank
may levy penalty as per their discretion.
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Are the interest rates on FCNR deposits liable for periodical
revision?
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Yes. The Banks have been permitted to offer interest
on such deposits at rates not in excess of LIBOR minus 25 basis points
in respect of the deposits of 6 months and above but less than one year
and LIBOR + 50 basis points in respect of deposits of maturity of one
year and above. (LIBOR rate prevailing on the last working day of the
previous week for the relevant maturity and currency.) Subject to this
guideline, banks can offer either fixed or floating rate of interest
on such deposits. [The rates of interest are subject to change in accordance
with the directives issued by Reserve Bank (Department of Banking Operations
and Development) from time to time.]
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What about debits to FCNR accounts for local payments?
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Debits for local payments in rupees are allowed freely.
As regards debits for investments in India, please see Chapters III
and IV.
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Are funds in FCNR accounts freely repatriable abroad?
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Yes. Authorised dealers maintaining these accounts would
allow repatriation abroad of these funds.
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Can FCNR deposits be held jointly with residents?
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No.
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Is nomination allowed in FCNR accounts?
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Yes.
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Is repatriation of FCNR funds to non-resident nominees
permitted?
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Yes. (Also see answer to Q.27 for repatriation of funds
in NRE account)
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What is the status of FCNR accounts on the return of
the account holder to India?
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Banks would treat the deposits held in FCNR accounts
as resident deposits but would continue to pay interest at the contracted
rate till maturity of the deposit.
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