NRI Banking

NRI ( Non Resident Indian)

As per the FEMA 1999, a Non-Resident Indian means-

A.      A person resident outside India who is a citizen of India, i.e  –

Ø  Indian citizens who proceed abroad for employment or for carrying or for carrying on any business or vocation or for any other purpose

Ø  Indian citizens working abroad

Ø  Officials of Central and State Government and Public Sector Undertaking deputed abroad on assignment with Foreign Govt

B.      A person of Indian origin who is a citizen of any other country other than Bangladesh or Pakistan, if

Ø  He, at any time, held the Indian Passport

Ø  He or either of his parents or any of its grandparents was a citizen of India.

Ø  The person is a spouse of an Indian citizen or a person referred in sub clause b(i) or (ii) above  

Thus, an NRI is a person of Indian nationality or origin, who resides abroad for business or vocation or employment, or intention of employment or vocation, and the period of stay abroad is infinite.

A person is of Indian origin if he has held an Indian passport, or he/she or any of his/hers parents or grandparents was a citizen of India.

NRIs have been provided with various schemes to open accounts and invest in India. The types of account facilities available at present are –

1.       Non-Resident (External ) Rupee Account  {NRE}

2.       Non-Resident Ordinary  Rupee Account  {NRO}

3.       Foreign Currency (Non-Resident) Account (Bank) { FCNR (B) }

Non-Resident (External ) Rupee Account  {NRE}

Ø  Accounts are maintained in Indian rupees.

Ø  Can be opened and maintained by NRI during the temporary visit to India.

Ø  Account can be as Saving Bank Account, Current Account, Recurring Account or term deposit with a minimum period of one year.

Ø  Account can be opened as Joint Account, in the name of two or more non-resident individuals

Ø  Jointly with a person resident in India is not permitted

Ø  Nomination facility is permitted either resident or non-resident

Ø  Income by way of interest on balance held in NRE account is exempted from income tax, gift tax and wealth tax.

Ø  Allowing temporary overdrawing up to Rs 50,000 in NRE saving account however such overdraft must be cleared within two week by remittance from abroad or from any other NRE account

Ø  NRE term deposits can be made for a minimum period of one year, with a maximum up to 3 years.

Non-Resident Ordinary Rupee Account { NRO}

Ø  Account are maintained in Indian rupees.

Ø  Open and maintained by any person resident outside India and also by Foreign Tourists, who visit to India on tourist visa.

Ø  When a resident becomes a Non-Resident, his domestic Rupee account has to be re-designated as an NRO account

Ø  NRO account can be opened as Joint Accounts, with resident Indians

Ø  An amount up to USD 1 million can be repatriated out of funds held n NRO account for permissible transactions, subject to payment of income tax at applicable rates.

Ø  Nomination facility is available in NRO account.   

Foreign Currency (Non-Resident) Account (Bank) { FCNR (B) }

Ø  These are foreign currency account

Ø  Opened and maintained by Non-Resident Indians in designated currencies only viz. US Dollor, EURO, Great Britain Pounds and Japanese Yen, CAD and AUD.

Ø  NRI can open these account only in the form of Term Deposit, with minimum period of one year and maximum period of five years.

Ø  Joint account can be opened in the name of two or more non-Resident Individuals, who are persons of Indian nationality or Indian origins.

Ø  Interest paid on the basis of 360 days to a year, cumulative on half-yearly intervals of 180 days

Ø  Income earned by way of interest is exempted by income tax .

Ø  Nomination facility is available.