Can Nri, Non-Resident Open a Bank Account in India?

RBI has specified accounts, such as NRE and FCNR (B) accounts, that may be opened and maintained in India by non-residents..[…]

A non-resident can open a bank account in India. The Reserve Bank of India (RBI) has specified accounts that may be opened and maintained in India by non-residents.

These include:

• Non-Resident (External) Rupee Account Scheme (NRE Account);
• Foreign Currency (Non-resident) Account (Banks) Scheme (FCNR(B) Account);
• Non-Resident Ordinary Rupee Account Scheme (NRO Account); and
• Special Non-resident Rupee Account (SNRR Account).

The salient features of each of these accounts are as follows:

NRE account

This is one of the most popular bank accounts with NRIs. NRIs are persons who are citizens of India and are resident outside India. This account may be opened with a bank in India by NRIs living abroad and foreign citizens who are of Indian origin, i.e., Persons of Indian Origin (PIO). It may be a savings, current, fixed or recurring deposit account.

The permitted credits in the NRE Account include:

• Remittances from outside India;
• Bank interest;
• Income from investments made in India (i.e. interest and maturity proceeds); and
• Current income such as rent, dividend, pension, interest etc.

The permitted debits in the NRE Account include:

• Local payments in India;
• Permissible investments; and
• Remittances outside India, subject to specified conditions.

Transfers within NRE Accounts of self or others are also permitted. The account may be opened either singly or jointly with other NRIs and PIOs, generally the family members. In order to facilitate easy operation of the account, NRIs may also jointly hold the NRE Account with a resident relative who holds a valid Power of Attorney from the NRI concerned.

Funds from a NRE account are freely repatriable.

FCNR(B) account

NRIs and PIOs are permitted to open and maintain FCNR(B) Account with a bank in India. The account can be held only as a fixed deposit in freely convertible foreign currency. Other conditions such as credits/debits, joint accounts, etc. as applicable to an NRE Account are applicable to FCNR(B) Account as well.

NRO account

While NRE Account and FCNR(B) Account may be opened only by NRIs and PIOs, NRO Account may be opened by all non-resident (including foreign nationals) for carrying out bona fide rupee transactions. Foreign nationals coming to India for employment or as a tourist may open a NRO Account. The account may be opened with funds remitted from outside India or by sale of foreign exchange brought into India.

It may be a savings, current, fixed or recurring deposit account.

Non-residents may jointly hold a NRO Account with residents as Power of Attorney holder. Additionally, NRIs and PIOs may also hold a NRO Account jointly with other NRIs and PIOs.

The permitted credits into NRO Account include:

• Inward remittances from outside India;
• Legitimate dues in India; and
• Rupee gift/loan made by a resident to a NRI/PIO relative subject to the limit prescribed under the Liberalized Remittance Scheme.

The permitted debits into NRO Account include:

• The account may be debited for local payments;
• Remittances of current income abroad; and
• Balance in the NRO Account may be repatriated abroad or to an NRE Account up to $1 million in a financial year (April to March).

Transfers within NRO accounts of self or others are also permitted.

A foreign national may also designate his rupee account as an NRO Account at the time of departure from India, on completion of employment in India. It may only be used for collection of bona fide dues in India, such as withdrawal from provident fund and pending dues from employer. Such receipts can be repatriated within the limit of $1 million per financial year.

SNRR account

A non-resident having a business interest in India may open a SNRR Account for making bona fide transactions in rupees. An SNRR account is non-interest bearing and may be operated for a maximum period of 7 years. Funds in SNRR Account are fully repatriable.

Taxes

While interest earned in NRE Account and FCNR(B) Account is tax-free, interest earned in NRO Account is taxable in India.

All remittances made outside India from the NRE, FCNR(B) or NRO Account are required to be made net of applicable taxes. While remitting funds overseas, Form A2 and a Chartered Accountant’s certificate in Form 15CB and a self-declaration in Form 15CA are required to be furnished to the bankers confirming that applicable taxes are deducted and/or deposited into the government treasury.

FAQs

I am a non-resident Indian and holding NRO and NRE Accounts in India. I am planning to come back and settle in India. Can I continue to hold my NRO and NRE Accounts?

You can continue to hold these accounts; however, they need to be designated as a resident rupee account after you return to India, as your intention is to stay in India for an uncertain period. The bankers should be informed immediately to change the status of the account.

I am visiting India on a tourist visa. Can I open a bank account in India and if yes, what type of account can be opened? Please advise.

You can open an NRO Account in India, which can be a savings or a current account. The account can be opened with remittances from outside India or by sale of foreign exchange to the bank. At the time of departure, the balances in the account can be paid to you, provided the account is maintained for a period not exceeding 6 months and the account has not been credited with any local funds, other than interest accrued, if any.

I am an NRI. I hold a residential property in India which I bought by remitting funds from overseas. I am planning to lease out this property in India. How do I repatriate the rental income out of India?

You can open an NRE Account in which the rental income can be deposited, provided the property was purchased from the NRE Account. These funds can be freely repatriated overseas from your NRE Account to your overseas Account, subject to payment of adequate taxes.

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