meet the specific needs of non-resident Indians related to
their remittances, savings, earnings, investments and
repatriation, the Government of India introduced in 1970
Non-Resident (External) Account Rules which are governed by
the Exchange Control Regulations.
accounts are maintained by banks which hold authorised
dealers' licences from the Reserve Bank of India. Some
cooperative and commercial banks have also been specifically
permitted to maintain NRI accounts in rupees even though they
are not authorised dealers. The financial budget for 2007-08
extends NRI accounts to regional rural banks (RRBs) as well.
This would boost remittances from NRIs particularly in Bihar,
Kerala, Uttar Pradesh and Gujarat where a large number of
persons from rural areas from these states are employed
Banking Laws for NRIs allow for
accounts with authorised dealers to be maintained in Indian
rupees and in foreign currency.
Foreign Exchange Management Act, 1999 determines the laws
regulating foreign exchange and enlists the various deposit
schemes available to Non-Resident Indians
The types of
deposit schemes made available to NRIs are:
FCNR (B) - Foreign Currency (Non-Resident)
Account (Banks) Scheme for all
b) NRE Account
- Non- Resident (External) Rupee Account for all
c) NRO Account
- Non-Resident Ordinary Rupee Account Scheme.
NRIs can open such accounts, with the exception of individuals
residing in Pakistan and Bangladesh, who require special
permission from the RBI. Joint accounts of two or more
non-residents and nomination facility are permitted.
the FCNR(B) is a term deposit only, the NRE and NRO accounts
can be operated as either savings, current, recurring or fixed
deposit accounts. As for interest rates, FCNR(B) and NRE are
subject to a cap, and should not exceed the LIBOR/SWAP rates.
In the case of NRO accounts, rates are determined by the
banks. The interest rates, currently at 3.5% apply to a period
of 1 to 3 years.
total NRE/ FCNR deposits during 2006-2007, as per RBI
statistics, are USD 37,751 million and are expected to grow
with regional rural banks also mopping up funds. Banks are
expected to offer lucrative interest rates to bolster NRI