BANKING FORMALITIES

Bank Accounts of Non-Residents

Non-Resident (External) Rupee Accounts (NRE Accounts)

NRIs, PIOs and OCBs are eligible to open NRE Accounts. These are rupee denominated accounts. Accounts can be in the form of savings, current, recurring or fixed deposit accounts. Accounts can be opened by inward remittance of funds in free foreign exchange. Foreign exchange brought in legally, repatriable incomes of the account holder, etc. can be credited to the account. Joint operation with other NRIs/PIOs is permitted. Power of attorney can be granted to residents for operation of accounts.

The deposits can be used for all legitimate purposes. The balance in the account is freely repatriable. Interest lying to the credit of NRE accounts is exempt from tax in the hands of NRIs/PIOs.

Ordinary Non-Resident Rupee Accounts (NRO Accounts)

These are Rupee denominated non- repatriable accounts and can be opened jointly with residents in India. When an Indian National/PIO resident in India leaves for taking up employment, etc. outside the country, his bank account in India gets designated as NRO account.

The deposits can be used to make all legitimate payments in rupees. Interest income, from NRO accounts is taxable. Interest income, net of taxes is repatriable.

Foreign Currency (Non -Resident) Accounts (Banks) (FCNR (B) Accounts)

NRIs, PIOs and OCBs can open/ maintain such an account in permitted currencies (e.g. US Dollars, Sterling Pounds, Deutsche Marks, Japanese Yen and Euro). The account may be opened only in the form of term deposit for any of the three maturity periods viz; (a) one year and above but less than two years (ii) two years and above but leas than three years and (iii) three years only.

FCNR (B) accounts can also be utilised for local disbursements including payment for exports from India, repatriation of funds abroad and for making investments in India, as per foreign investment guidelines. Interest lying to the credit of FCNR(B) account is exempt from tax in the hands of NRIs/PIOs.