FAQ - Bank Account

Can accounts be maintained by NRIs with any bank in India?

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.

Are NRIs permitted to maintain accounts in rupees and in foreign currency?

Yes. Accounts can be maintained by NRIs in rupees as well as in foreign currency. Accounts in foreign currencies can, however, be maintained with authories dealers only.

Can NRIs maintain current/savings/fixed deposit rupee accounts with authorised dealers/authorised banks in India?

NRO and NRE accounts can be maintained in current/savings/ fixed deposit form while NRNR accounts can be only in fixed term deposits.

What are the different types of rupee accounts permitted to be maintained?

Three types of rupee accounts Viz. Non-resident (External) Rupee Accounts (NRE account), Ordinary Non- resident Rupee Account (NRO accounts ) and Non-resident (Non-repatriable) Rupee Deposit accounts (NRNR) are permitted to be maintained.

Can proceeds of foreign currency notes/travellers cheques be credited to NRE accounts without any restriction?

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. $2,500 or its equivalent or the total amount tendered i.e. currency notes and travellers cheques, are in excess of 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 presence of the official of the concerned bank.

Can NRE accounts be opened by the power of attorney holder in India on behalf of a non-resident?

No.

Can resident Power of Attorney holder operate on the NRE accounts?

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 investment in India, the Power of Attorney holder (POA) is permitted to operate the account or facilitate such investment. POA holders cannot, however, make gifts from NRE accounts.

Can Power of Attorney holder credit proceeds of foreign currency notes/bank notes and travellers cheques to the NRE accounts?

No.

What is the distinction between NRE account and NRO account?

Balances held in NRE accounts can be repatriated abroad freely, whereas funds in NRO account cannot be remitted abroad but 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 which do not qualify, under the Exchange Control regulations, for remittance outside India are required to be credited to NRO accounts.

Can NRO/NRE accounts be maintained by NRIs jointly with residents?

NRO accounts can be held jointly with residents, However, NRE accounts cannot be held jointly with residents.

What is the rate of interest payable on such accounts?

In the case of NRE accounts, the interest rates for deposits up to one year should not exceed Bank Rate minus 2 percentage points. Interest rates on term deposits of over one year are determined by the banks themselves. Interest rates on NRO accounts are fixed as in the case of domestic deposits.

Are debits and credits to NRO accounts allowed freely by bank maintaining the accounts?

Yes. Debits for local payments are allowed freely, Funds representing legitimate dues of the accounts holder of proceeds of remittances received from abroad through banking channels are permitted to be credited freely.

What are the admissible debits and credits to NRE accounts?

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 repatrible nature i.e. eligible to be remitted abroad.

Can funds in NRE/NRO accounts be repatriated outside India?

Funds held in NRE accounts can be repatriated abroad freely. Funds held in NRO accounts which would generally be from a local source cannot be repatriated outside India. Interest earned on funds in NRO accounts during the financial year 1994-95 and onwards can however, be remitted to the extent permitted by Reserve Bank (See Answers to Question 59 and 60).

Can funds in NRE/NRO accounts be utilised for payment of air fare to /from/in India of the account holder and/or his dependents?

Yes. Banks maintaining the accounts have been authorised to permit such payments, Airlines/Shipping companies and their agents have also been permitted to accept payments in rupees from the funds held in NRO/NRE accounts for the purpose.