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Banks offer two
types of accounts to NRIs, based on their repatriablity.
Repatriable
Accounts Funds
that can be transferred or repatriated abroad are maintained
in a Non Resident External Bank account. Generally, funds
remitted from outside India are credited to this account.
Investments made from foreign funds can be repatriated
overseas, and such investments are maintained in a Repatriable
Demat account.
Non-Resident (External) Rupee (NRE)
Accounts
- Both
Principal and Interest can be repatriated/transferred out of
India
- Savings
rate on NRE accounts is at par with savings rates in
resident accounts
- Term
deposits can be made for 1 to 3 years.
- The
interest rates on (NRE) Term deposits cannot be higher than
LIBOR/SWAP rates as on the last working day of the previous
month, for US dollar of corresponding maturity plus 50 basis
points.
The
interest rates on three year deposits also apply in case the
maturity period exceeds three years. The change in interest
rate also applies to NRE deposits renewed after their present
maturity period. FCNR (B)
Accounts
- As
in NRE accounts, both principal and interest are
repatriable.
- Presently,
deposits can be made in 6 specific foreign currencies (US
Dollar, Pound Sterling, EURO, Japanese Yen, Australian
Dollar and Canadian Dollar).
- Interest
rate- Fixed or floating within the limits of LIBOR/SWAP
rates for the respective currency/corresponding term minus
25 basis points (except Japanese Yen).
- The
term of deposits can range between 1 to5 years.
NRO Accounts
- Only
current earnings are repatriable.
- Savings
NRO accounts are normally operated to credit rupee income
from shares, interest, rent from property in India, etc.
- In
case of term deposits, banks are allowed to determine their
own interest rates.
Banks
can allow remittance upto USD 1 million per financial year for
bonafide purposes from balances in the NRO accounts once taxes
are paid out. This limit includes the sale proceeds of
immovable properties held by NRIs and PIOs. Resident Foreign Currency (RFC)
Account
NRIs and PIOs returning to India can maintain an RFC
account with an authorized bank in India to transfer funds
from their NRE/FCNR (B) accounts. Proceeds of assets held
outside India before their return to India can be credited to
the RFC account. These funds are free from all restrictions as
to their utilization or in investment in any form outside
India.
Non-Repatriable
Accounts Non-repatriable
funds are those which cannot be taken out of India. These have
to be maintained in a separate bank account i.e. a Non
Resident Ordinary Bank account.
Investments made from non-repatriable accounts cannot be
repatriated but have to be maintained in a
Non-Repatriable Demat account. Money once transferred from an
NRE account to an NRO account cannot be transferred back to an
NRE account.
Non Resident
Ordinary (NRO) Account
- When
a resident becomes an NRI, his existing savings account is
designated as a Non-resident Rupee (NRO) account.
- The
NRO accounts could be maintained in the nature of current,
saving, recurring or term deposits. NRIs can also open NRO
accounts for depositing their funds from local transactions.
- The
interest earned from NRO accounts is accountable to tax
laws.
- NRO
accounts can be opened in the name of NRIs who have left
India to take up employment or business temporarily or
permanently in a foreign country.
- Funds
from NRO accounts are not repatriable or transferred to NRE
accounts without the prior approval of the RBI.
However,
NRIs, PIOs, Foreign Nationals, retired employees or
non-resident widows of Indian citizens can remit, through the
Authorised Dealer, up to USD one million per calendar year
from the NRO account or from income from sale of assets in
India. |
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