Open NRE/NRO Account

NON RESIDENT INDIAN ( NRI ) ( Definition ) :

Foreign Exchange Management Act (FEMA) defines a Non-Resident as a person who is not resident in India, a person resident outside India who is a citizen of India or is a person of Indian origin.

The following persons’ can be classified as Persons resident outside India.

A) Indian citizen ( holding Indian Passport ) staying outside India, who go abroad

  • For taking up Employment
  • For carrying on Business
  • On vocation
  • For studying abroad
  • Or for any other purpose in such circumstances as would indicate his/her intention to stay outside India for an indefinite or uncertain period.
  • A resident Indian who leaves India for taking up employment or for carrying on business or vocation or for any other purpose indication his intention to stay overseas for an indefinite period, is an NRI for the purpose of opening and maintaining NRE, FCNR (B) and NRO account.

B) Person of Indian Origin :

A Person of Indian Origin (PIO ) is a citizen of any country other than Bangladesh or Pakistan, if

  • He at any time held Indian Passport; or
  • He or either of his parents or any of his grand-parents was a citizen of India by virtue of the Constitution of India or the Citizenship Act, 1955 (57 of 1955) or
  • The person is a spouse of an Indian citizen or a person referred to in sub-clause (a) or (b).
  • PIO are treated as NRI for the purpose of opening and maintaining NRE, FCNR (B) and NRO accounts with banks in India.
  • Student who go abroad for uncertain period are treated as Non Resident Indians.
  • Indian citizen working abroad on assignments with Foreign Government, Government Agencies or International/Multinational  Agencies like UNO/IMF/World Bank etc. are treated as Non Resident Indians.
  • Officials of Central Government and Public Sector Undertaking deputed abroad on assignments with foreign Government/Agencies/Organizations or posted to their own offices including diplomatic mission abroad are also treated as Non Resident Indians.
  • Crew members of Indian nationality or Indian origin employed by foreign airlines/shipping companies, if they are based at foreign ports and reside abroad in connection with their employment are also treated as Non /resident Indians. The crew members of Foreign airlines/shipping companies who are shore staff of these companies and are posted abroad for duty on short term or long-term basis are also treated as Non Resident Indians.
Opening of NRI Accounts
As a Non Resident Indian, you can open
  • NRE Savings / Current Account.
  • NRE Fixed Deposits in Indian Rupees ( NRE Time Deposit ).
  • Fixed Deposit in Foreign Currency [ FCNR (B) ] in USD, GBP, EURO,CAD and AUD.
  • NRO savings / Current Account. 
  • NRO Fixed Deposit in Indian Rupees.

How to open Account :

  • There are special common form for opening these accounts.
  • When a person approaches to open account during his temporary stay in India, he should fill the account opening form and his passport details would be verified.
  • If the account opening forms are received from the prospective account –holder from abroad, his signature on the form would be verified and attested by the Indian Embassy / Consulate, Notary Public, any of our Correspondent Bank or a person known to the Bank.
  • Complete the Account opening form and accept along with  Passport copy and Resident Visa – copy of these documents duly attested by Banker/Notary Public / Indian Embassy / Customer’s Employer to the satisfaction of the Bank.
  • Additional documents – Photograph of Account Holder / s and Domestic Address proof (if domestic address proof is not in the name of NRI is acceptable).
  • The accounts may be held jointly with Residents and/or with Non-Residents. If the joint holder is Resident – Resident’s signature is not valid till the NRI account holder is live. i.e. the account can be operate on former or survivor basis.
  • A resident may be authorized to operate the account through a Power of Attorney / Letter of Authority to operate account.
  • Power of Attorney / Letter of Authority holder can not be open a account but only operate the account.
  • Nomination facility is available, Nominee can be a resident Indian or a Non-resident Indian. Payment and repatriation of balance to non-resident nominee account will be as per extant RBI / Bank’s Rule.
  • During NRI’s temporary visit to India, he may open account even by tendering foreign currency notes / foreign currency travelers cheques by his personal visit to Branch.
  • Currency Declaration Form ( CDF ) will have to be required if foreign currency notes is exceeding USD 5000 or its equivalent and combination of foreign currency notes and travelers cheques exceeds USD 10000  or its equivalent.
  • If the account opening form is received from the prospective account –holder from abroad – he may open account by way of 
    1) Inward Remittance from abroad through normal banking channel.
    2) Transfer fro+m another NRE/FCNR(B) Account held with other Branch / Bank.
    3) Personal Cheques / Drafts in foreign currency.

Transaction of NRE Accounts :

Credits that are allowed in Non- Resident (External ) Accounts – NRE Accounts

  • Proceeds of remittances to India in any permitted currency.
  • Proceeds of personal cheques drawn by the account holder on his foreign currency account and by travelers cheques, bank drafts payable in any permitted currency including instruments expressed in Indian rupees for which reimbursement will be received in foreign currency, deposited by the account holder in person during his temporary visit to India, provided the authorized dealer/bank is satisfied that the account holder is still resident outside India, the travelers’ cheques /drafts are standing/endorsed in the name of the account holder and in the case of travelers’ cheques, they are issued outside India.
  • Proceeds of foreign currency/bank notes tendered by account holder during his temporary visit to India,  Provided :
  • 1) The amount was declared on Currency Declaration Form (CDF). Where ever applicable and
    2) The notes are tendered to the authorized dealer in person by the account holder himself and the authorized dealer/bank is satisfied that account holder is a person resident outside India.
  • Transfer form other NRE / FCNR (B) accounts.
  • Interest accruing on the funds held in the account.
  • Interest on government securities and dividend on units of mutual funds, provided the securities/units were purchased by debit to the account holder’s NRE/FCNR (B) account or out of inward remittance through normal banking channels.
  • Maturity proceeds of Government securities including National Savings Certificates as well as proceeds of Government securities and units of mutual funds sold on a recognized stock exchange in India and sale proceeds of units received from mutual funds, provided the securities/units were originally purchased by debit to the account holder’s NRE/FCNR (B) account or out of remittances received from outside India in foreign exchange. 
  • Refund of share/debenture subscriptions to new issues of Indian companies or portion thereof, if the amount of subscription was paid from the same account or from other NRE/FCNR (B) account holder or by remittances from outside India through normal banking channels.
  • Refund of application/earnest money/purchase consideration made by the house building agencies/seller on account of non-allotment of flat/plot/cancellation of bookings/deals for purchase of residential/commercial property, together with interest, if any (net of income tax payable thereon), provided the original payment was made out of NRE/FCNR (B) account holder or remittances from outside India through normal banking channels and the authorized dealer is satisfied about the genuineness of the transaction.

Credit of Current Income of NRIs :

Authorized dealers may credit the current income like rent, dividend, pension, interest etc of NRIs to their Non- Resident (External) Rupee accounts provided they are satisfied that the credit represents current income of the non-resident account holder and income tax thereon has been deducted/paid/provided for, as the case may be.

Debits that are allowed in Non-Resident (External) Accounts :  NRE Accounts :

  •  Local disbursements.
  •  Remittances outside India.
  •  Transfer to NRE/FCNR (B)/ NRO  accounts of the account holder or any other person eligible to maintain such account.
  •  Investment in shares/securities/commercial paper of an Indian company or for the purchase of immovable property in India provided such investment/purchase in covered by the regulations of the general/special permission granted, by Reserve Bank of India.
  •  Any other transaction if covered under general of special permission granted by the Reserve Bank of India. 

Non-Resident Ordinary Accounts : NRO

Rupee accounts maintained with banks in India, by Non-Residents as distinct from Non-Resident (External) Accounts and Foreign Currency Non-Resident Accounts, are Non-Resident (Ordinary ) Accounts (NRO). The essential features of this category of accounts are that the funds therein are not repatriable outside India except with the specific approval of Reserve Bank of India and the operations on the accounts are subject to certain restrictions.

Permissible Credit / Debits : Credits :

  • Proceeds of remittances from outside India through normal banking channels received in foreign currency, which is freely convertible.
  • Any foreign currency, which is, freely convertible tendered by the account holder during his temporary visit to India. Foreign currency exceeding USD 5000 or its equivalent in form of cash should be supported by Currency Declaration Form (CDF). Rupee funds should be supported by Enchashment Certificates, if they represent funds brought from outside India.
  • Transfer from rupee accounts of Non-Resident banks.
  • Legitimate dues in India of the account holder. This includes current income like rent, dividend, pension, interest etc. as also sale proceeds of assets including movable property acquired out of rupee/foreign currency funds or by way of legacy/inheritance.

Debits :

  • All loacal payments in rupees including payments for investments in India subject to compliance with the relevant regulations made by Reserve Bank OF India
  • Remittance outside India of current income like rent, dividend, pension, interest etc in India of the account holder.
  • Remittance up to USD 1 million per financial year ( April – March ), for all bonafide purpose, to the satisfaction of the authorized dealer bank.

Income tax on NRO Accounts : 

As per Income Tax Act, 1961, as amended from time to time, the tax on income by way of Interest has to be deducted at source.

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