Q.1 Can NRIs maintain current / savings / fixed deposit rupee accounts with authorised dealers / authorised banks in India?
Ans. NRO, NRE accounts can be maintained in current / savings / fixed deposits.
Q.2 What are the different types of rupee accounts permitted to be maintained?
Ans. Two types of rupee accounts viz. Non-resident (External) Rupee Accounts ( NRE accounts), Ordinary Non-resident Rupee Accounts (NRO accounts).
Q.3 Can proceeds of foreign currency notes / travellers cheques be credited to NRE accounts without any restriction?
Ans. 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. $5,000 or its equivalent or the total amount tendered i.e. currency notes and travellers cheques, are in excess of U.S.$ 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.
Q.4 Can a power of attorney holder in India open a NRE account on behalf of a non-resident and can he credit proceeds of foreign currency notes / travellers cheques to NRE ACCOUNTS?
Ans. No. Opening of NRE account through power of attorney is not permitted. However, power of attorney holder can subsequently be appointed to operate NRE account for all local payments and repatriation of funds to NRE account holder alone.
Q.5 Can Resident Power of Attorney holders operate on the NRE accounts?
Ans. 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 the 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 and repatriation of funds abroad.
Q.6 Can NRO / NRE accounts be maintained by NRIs jointly with residents?
Ans. NRO accounts can be held jointly with residents. However, NRE accounts can be held jointly with resident individual with the operating instruction "Former or Survivor".
Q.7 Are debits and credits to NRO accounts allowed freely by banks maintaining the accounts?
Ans. 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.
Q.8 What are the admissible debits and credits to NRE accounts?
Ans. 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 repatriable nature i.e. is eligible to be remitted abroad.
Q.9. Can funds in NRE / NRO accounts be repatriated outside India?
Ans. Funds held in NRE accounts can be repatriated abroad freely. Funds held in NRO accounts representing income from local resources like rent, dividend, interest etc. and sale proceeds of immovable property is repatriable or can be credited in NRE Account upto USD 1 million per financial year subject to submission of undertaking & certificate prescribed by CBDT/ Bank subject to payment of tax as applicable. Banks are required to deduct tax on interest on deposits at source.
Q.10. Can funds in NRE / NRO accounts be utilised for payment of air fare to / from / in India of the account holder and / or his dependants?
Ans. Yes. Banks maintaining the accounts have been authorised to permit such payments. Airlines / shipping companies and their agents have also been permitted to accept payments in rupees from the funds held in NRO / NRE accounts for the purpose.
Q.11. Are temporary overdrawings permitted in NRO / NRE Savings Bank accounts?
Ans. Yes. Authorised dealer may allow such overdrawings upto Rs. 50,000 subject to the condition that the overdrawings together with the interest payable thereon are cleared within a period of two weeks either by way of remittances from abroad or out of legitimate funds of the account holder or transfer from his NRE / FCNR accounts. However, authorised dealers may exercise their own discretion / commercial judgement while allowing overdraft under this provision.
Q.12. Are NRO/NRE account holders eligible for loans / overdrafts against their fixed deposits?
Ans. 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 a non-repatriation basis, in certain specified areas and for acquisition of flats / houses subject to prescribed conditions. Loans against NRE fixed deposit is restricted to maximum Rs.100 Lakhs.
Q.13. What are the rates of interest charged on such loans?
Ans. Interest rates are at the discretion of the bank depending on the purpose of loan.
Q.14. Can loans raised against NRE fixed deposits be repaid out of funds in NRO accounts?
Ans. The loans raised against NRE deposits can be repaid out of NRO funds but in such cases, the interest would be charged at commercial rate as in force from time to time.
Q.15. Is nomination allowed in NRO / NRE / FCNR (B) accounts ?
Q.16. Is repatriation of funds belonging to non-resident nominees permitted?
Ans. Funds held in the NRO account will be allowed to be credited to the non-resident nominee's NRO account only and no repatriation is permitted. Funds from the deceased person's NRE account paid to resident nominee will be allowed for remittance outside India for meeting liabilities if any of deceased account holder or for similar other purposes by submitting application to RBI.
Q.17. Is transfer of funds between NRE accounts maintained by two different account holders permitted?
Ans. Yes. Authorised dealers can permit transfer of funds from the NRE account of one person to the NRE account of another person for bonafide personal purposes. Transfers by way of gifts are permitted subject to payment of gift tax.
Q.18. Is there any scheme under which non-residents other than NRIs can also keep rupee deposits with banks in India?
Ans. Yes. NRIs and other non-residents can maintain NRO Rupee accounts Scheme. Example foreign tourists.
Q.19. What is the status of NRO /NRE accounts on the return of the account holder to India?
Ans. Banks have been advised to redesignate such accounts as resident accounts on return of the account holder to India.
Q.20. Does the account holder suffer any loss of interest on such redesignation of accounts?
Ans. No banks will continue to pay interest at the contracted rate till its first maturity of the deposit if the deposit is held for the full term even after conversion into resident rupee account.