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Non Resident (Non-repatriable) Rupee Deposit (NRNR) Resident Foreign Currency Accounts An NRI can open an account in any Bank holding an authorised dealer's licence (i.e. authorized to deal in foreign exchange) issued by Reserve Bank of banks specifically authorized in this behalf by Reserve Bank. Certain co-operative/commercial banks (referred to as authorized banks) have been specifically permitted to maintain accounts of NRIs expressed in rupees even though they are not authorised dealers. Accounts can be maintained by NRIs, either in rupees or in foreign currency. An NRI can maintain two types of rupee accounts viz Non-resident (External) Rupee Accounts (NRE accounts) and Ordinary Non-resident Rupee Accounts (NRO accounts) .Funds for opening of or credit to NRE accounts have, however, to be remitted from abroad or tendered in the form of foreign currency notes, travelers cheques etc. while on a visit to India. Credits exceeding US $ 10,000 or its equivalent representing proceeds of foreign currency notes/travelers cheques will be allowed, provided they were declared to the Customs in the Currency Declaration Form at the time of entry into India. Funds remitted from abroad and which are of repatriable nature can be credited to NRE accounts. Local funds which do not qualify, under the Exchange Control regulations, for remittance outside India are required to be credited to NRO accounts. Banks in India have been authorized to allow repatriation of funds held in NRE accounts freely. Funds held to NRO accounts which would generally be from a local source cannot ordinarily be repatriated outside India. Reserve Bank would consider repatriation of such funds on the merits of each case provided it is satisfied that the funds are of repatriable nature and have not also lost their identity. The accounts can be maintained in any form i.e. Current, Savings or Fixed Deposit Accounts. While in the case of NRE accounts, the interest rates are fixed by Reserve Bank, banks are free to determine the interest rates in the case of NRO accounts as in the case of domestic deposits. Income from interest on money standing to the credit of accounts other than NRO accounts is exempt from incometax. Gifts from such accounts are also free of Gift-tax. 
Non Resident (Non-repatriable) Rupee Deposit (NRNR) Scheme Under this scheme, NRIs as well as other non
residents can keep deposits with banks in India.
Such an account can be opened by NRIs and other
non residents 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. The principal
amount of deposit is not eligible for
repatriation. However, interest on the deposits
is repatriable.
FCNR ACCOUNTS Under the Foreign Currency (Non-resident) Account (FCNR account) Scheme, accounts can be maintained with authorized dealers in India in a foreign currency. FCNR accounts can be maintained in Pound Sterling, US Dollar, Deutsche Mark and Japanese Yen. FCNR accounts can be maintained only in the form of term deposit, i.e. a deposit kept for a fixed period or which is subject to withdrawal or repayment after notice. Interest, however, is payable on such deposits only if they are for a minimum period of six months. The maximum period of maturity is three years
Authorized dealers maintaining these accounts
would allow repatriation abroad of these funds.
Under the Foreign Currency (Ordinary-Non-
repatriable) Deposit Scheme, deposits can be
maintained in U.S. dollar for a fixed period
of 3 years. Interest on such deposits is paid at
2% above the rate applicable to FCNR Deposits
for 3 years. Interest earned and maturity
proceeds are, however, allowed to be paid only
in rupees in India can not be repatriated abroad.
Resident Foreign Currency Accounts Under Resident Foreign Currency Scheme (RFC),
NRIs who have returned to India for permanent
settlement can open foreign currency accounts
with banks in India. To be eligible for this
facility, the person should have been resident
outside India for a continuous period of not less
than one year. RFC accounts can be maintained in
any convertible foreign currency. The entire
amount of foreign exchange brought to India at
the time of their return to India for permanent
settlement as well as balances standing to the
credit of their NRE and FCNR accounts at the time
of return can be credited to RFC accounts. The
income received from their overseas assets, sale
proceeds, pension dividend's etc. repatriated to
India can be credited to RFC accounts. Funds in
RFC accounts can be remitted abroad for any
bonafide purpose of the account holder or his
dependents. The funds in RFC accounts can also be
repatriated by the holder who desires to go
abroad for employment/business etc. Returning
Indians are permitted to retain their assets
abroad even after their return to India.
Tax Concessions Tax concessions are available to NRIs on balances/deposits held in NRE/FCNR accounts. Income from interest on funds standing to the credit of NRE/FCNR accounts is exempt from income tax and gift tax. The tax benefits available to NRIs under NRNR deposit account are as under:
Source: Indian Investment Centre Last Update: August 31, 1998 |