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NRI Banking FAQs
Who is a non-resident Indian (NRI)?
An Indian Citizen who stays abroad for employment/carrying on business or vocation outside India or stays abroad under circumstances indicating an intention for an uncertain duration of stay abroad is a non-resident. Persons posted in U.N. organisations and officials deputed abroad by Central/State Governments and Public Sector undertakings on temporary assignments are also treated as non-residents.Non-resident foreign citizens of Indian Origin are treated on par with non-resident Indian citizens (NRIs) for the purpose of certain facilities.Resident Indian students proceeding abroad for persuing studies are also treated as Non-Resident.
Who is a person of Indian Origin?
A) For the purposes of availing of the facilities of opening and maintenance of bank accounts and investments in shares/securities in India.
A foreign citizen (other than a citizen of Pakistan or Bangladesh) is deemed to be of Indian origin, if
(i) he/she, at any time, held an Indian passport
(ii) he/she or either of his parents or any of his grandparents was a citizen of India by virtue of the Constitution of India or Citizenship Act, 1955 (57 of 1955).
B) For investments in immovable properties
A foreign citizen (other than a citizen of Pakistan, Bangladesh, Afghanistan, Bhutan, Sri Lanka, or Nepal), is deemed to be of Indian origin if,
(i) he/she held an Indian passport at any time
(ii) he/she or his father or paternal grandfather was a citizen of India by virtue of the Constitution of India or the Citizenship Act, 1955 (57 of 1955).
Note: A spouse (not being a citizen of Pakistan or Bangladesh) of an Indian citizen or of a person of Indian origin is also treated as a person of Indian origin for the above purposes provided the bank accounts are opened or investments in shares/securities in India are made by such persons only jointly with their NRI spouses.
What are the various facilities available to NRIs?
NRIs are granted the following facilities :
Maintenance of bank accounts in India.
Investments in securities/shares of, and deposits with, Indian firms/companies.
Investments in immovable properties in India.
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 authorised dealers only.
What are the different types of rupee accounts permitted to be maintained?
NRIs are permitted to maintain Two types of rupee accounts viz. Non-resident (External) Rupee Accounts (NRE), Account, Ordinary Non-resident Rupee Accounts (NRO).
Can NRIs maintain current/savings/fixed deposit rupee accounts with authorised dealers/authorised banks in India?
NRO, NRE accounts can be maintained in current/savings/fixed deposits form.
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.$ 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.
Can the power of attorney holder in India on behalf of a non-resident open NRE accounts?
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 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.
Can Power of Attorney holder credit proceeds of foreign currency notes/bank notes and travellers cheques to the NRE accounts?
What is the distinction among NRE account and NRO account?
Balances held in NRE accounts can be repatriated abroad freely, whereas funds in NRO accounts can be remitted abroad within an overall limit of USD 1 million per financial year subject to certain formalities. Consequently, funds remitted from abroad or local funds, which can otherwise be remitted abroad to the account holder, can be credited to NRE accounts to take the benefits of repatriation and income tax. Funds due to the non-resident accountholder which do not qualify, under the provisions of FEMA, for remittance outside India are required to be credited to NRO accounts.
Can NRO/NRE/ accounts be maintained by NRIs jointly with residents?
Yes, NRO accounts can be held jointly with residents and NRE accounts can be held jointly with resident relative on Former or Survivor basis (close relative as defined in sec 6 of Companies Act 2013). However during the lifetime of the NRI / PIO account holder, the resident relative can operate the account only as Power of Attorney Holder.
Are debits and credits to NRO accounts allowed freely by banks maintaining the accounts?
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 account holder 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.
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 repatriable nature i.e. funds, which are 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, can be repatriated outside India with an overall limit of USD one million per financial year including sale of assets held by NRI's in India, on production of an undertaking and certificate by a person making remittance in Form and application for remittance as given under section 195 of the Indian Income-Tax Act.
Can funds in NRE/NRO 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?
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.
Are NRO/NRE account holders eligible for loans/overdrafts against their fixed deposits?
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.
Can loans raised against NRE fixed deposits be repaid out of funds in NRO/account?
The loans raised against NRE deposits can be repaid out of funds held in NRO accounts but in such cases, the interest would be charged at commercial rate in force from time to time.
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