Ans. Banks holding authorised dealers' licences (i.e. banks authorised to deal in foreign exchange) or banks specifically authorised in this behalf by Reserve Bank can only maintain accounts in the names of NRIs. Certain co-operative/commercial banks (referred to as authorised banks) have been specifically permitted to maintain accounts of NRIs expressed in rupees even though they are not authorised dealers.
Ans. Yes. Accounts can be maintained by NRIs in rupees as well as in foreign currency. Accounts in foreign currencies can, however, be maintained with authorised dealers only.B. Rupee Accounts
Ans. Four types of rupee accounts viz. Non-resident (External) Rupee Accounts (NRE), Non-Resident (Special) Rupee (NRSR) Account, Ordinary Non-resident Rupee Accounts (NRO) and Non-resident (Non-repatriable) Rupee deposit accounts (NRNR) are permitted to be maintained by NRIs.
Ans. NRO, NRE and NRSR accounts can be maintained in current/savings/fixed deposits form while NRNR account can be only in fixed term deposits.
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.$ 5000/- or its equivalent or the total amount of currency notes and travellers cheques tendered for credit to NRE accounts exceeds 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.
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 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.
Ans. Balances held in NRE accounts can be repatriated abroad freely, whereas funds in NRSR and NRO account cannot be remitted abroad but have to be used only for local payments in rupees. Consequently, funds remitted from abroad or local funds which can otherwise be remitted abroad to the account holder can only be credited to NRE accounts. Funds due to the non-resident accountholder which do not qualify, under the Exchange Control regulations, for remittance outside India are required to be credited to NRO accounts. The accountholders can freely transfer funds from NRO/NRE/FCNR accounts to NRSR account but transfer of funds from NRSR account to other accounts of NRI is not permissible irrespective of the source of funds.
Ans. NRO & NRSR accounts can be held jointly with residents. However, NRE accounts cannot be held jointly with residents.
Ans. Banks in India have been given freedom to decide interest rates on all non-resident rupee accounts. However, the rates of interest on deposits are subject to change as per the directives issued by Reserve Bank (Department of Banking Operations and Development) from time to time.
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. Debits to the accounts for the purpose of investment in India and credits representing sale proceeds of investments are allowed subject to the accountholder giving an undertaking at the time of opening the account to the effect that such investments/disinvestments would be covered either by the general or special permission of Reserve Bank.
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 a repatriable nature i.e. funds which are eligible to be remitted abroad.
Ans. Funds held in NRE accounts can be repatriated abroad freely. Funds held in NRO accounts which would generally be from local source cannot be repatriated outside India. Funds held in NRSR account also cannot be repatriated.
Ans. Yes. Banks maintaining such accounts have been authorised to permit such payments. Airlines/shipping companies and their agents have also been permitted to accept payments in rupees.
Ans. Yes. Authorised dealers may allow such overdrawings up to Rs. 20,000/- subject to the condition that the overdrawings together with the interest payable thereon are cleared within a period of two weeks.
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 non-repatriation basis, in certain specified areas and for acquisition of flats/houses subject to prescribed conditions.
Ans. The rate of interest on such loans will be as per the directive issued by Reserve Bank (Department Banking Operations and Development) from time to time.
Ans. The loans raised against NRE deposits can be repaid out of funds held in NRO/NRSR accounts but in such cases, the interest would be charged at commercial rate in force from time to time.
Ans. Yes. Subject to certain conditions.
Ans. Funds held in NRO/NRSR accounts will be allowed to be credited to the non-resident nominee's NRO/NRSR account only and no repatriation is permitted. Remittance of funds to the non-resident nominee from the deceased person's NRE account will be permitted by authorised dealers.
Ans. Yes. Authorised dealers can permit transfer of funds from the NRE account of one person to the NRE account of another person. Authorised dealers can transfer funds held with them in NRE account to the account of same person held with another authorised dealer. Funds held in NRE account can also be transferred to other authorised dealer for the purpose of opening NRE account in the name of the same person provided a certificate confirming the NRE status of the account from which funds are transferred is produced. Transfer of funds by way of gift can be permitted by authorised dealer after obtaining an undertaking from the transferee/transferee's bank that gift tax rules/regulations have been complied with.
Ans. Remittances for credit to rupee accounts (i.e. NRE/NRO/NRNR/NRSR accounts) maintained by NRIs are converted at the market rate.
Ans. Yes, NRIs and other non-residents can maintain NRO rupee accounts as well as keep deposits with banks in India under NRNR Rupee Deposit Scheme.
Ans. Such an account can be opened with an authorised dealer in India by remitting funds from abroad in any convertible foreign currency. Under the NRNR Scheme, deposits designated in rupees can be kept for periods ranging from 6 months to 3 years. NRIs can also open such accounts by transferring funds from their existing NRE/FCNR accounts. No penal interest is chargeable for premature withdrawal of NRE/FCNR deposits for the purpose of making investment in the scheme if the deposit is to be kept with the same authorised dealer.
Ans. The principal amount of the deposit is not eligible for repatriation. Interest earned up to 30th September 1994 is also not eligible for repatriation. Interest earned for the period beginning 1st October 1994 is, however, eligible for repatriation or can be utilised for opening fresh NRE/FCNR deposits, or can be credited to existing NRE accounts.
Ans. Only the principal amount of deposit could be renewed under the scheme upto 30th September 1994. However, since interest accrued for the period from 1st October 1994 is repatriable, the principal amount together with interest accrued for the period from 1st October 1994 can be renewed under the scheme.
Ans . Authorised dealers are permitted to grant loans/overdrafts for purposes other than investment.
Ans. No Banks have been advised to continue to pay interest at the contracted rate till the maturity of the deposit if the deposit is held for the full term even after conversion into resident rupee account.C. Foreign Currency Accounts
Ans. Yes. Accounts in foreign currencies (FCNR accounts) can be maintained by NRIs/OCBs with authorised dealers in India.
Ans. FCNR Accounts can be maintained in Pound Sterling, U.S. Dollar, Deutsche Mark (upto December 2001), Euro and Japanese Yen.
Ans. No. FCNR accounts can be maintained only in the form of 'term deposits', i.e. a deposit kept for fixed periods ranging from 6 months to 3 years.
Ans. Yes. However, this is subject to the levy of a penalty.
Ans. Interest in such cases is paid at one per cent below the interest rate payable for the period for which the deposit has actually run. Interest on deposits is, however, payable only if they are kept for a minimum period of six months. Incidentally, these matters are governed by the instructions/directives issued by Reserve Bank (Department of Banking Operations and Development) from time to time.
Ans. No. While the premature withdrawal would be allowed, no interest would be payable. For such premature withdrawals the bank may levy penalty as per their discretion.
Ans. Yes. The Banks have been permitted to offer interest on such deposits at rates not in excess of LIBOR minus 25 basis points in respect of the deposits of 6 months and above but less than one year and LIBOR + 50 basis points in respect of deposits of maturity of one year and above. (LIBOR rate prevailing on the last working day of the previous week for the relevant maturity and currency.) Subject to this guideline, banks can offer either fixed or floating rate of interest on such deposits. [The rates of interest are subject to change in accordance with the directives issued by Reserve Bank (Department of Banking Operations and Development) from time to time
Ans. Debits for local payments in rupees are allowed freely. As regards debits for investments in India, please see Chapters III and IV.
Ans. Yes. Authorised dealers maintaining these accounts would allow repatriation abroad of these funds.
Ans. Banks would treat the deposits held in FCNR accounts as resident deposits but would continue to pay interest at the contracted rate till maturity of the deposit.
Ans. Yes. NRIs are freely permitted to invest their funds in Government securities or Units of UTI through authorised dealers. Units can also be purchased directly from UTI.
Ans. Yes. Investments in National Savings Certificates can be made by NRIs subject to the terms and conditions applicable to the sale/issue of such certificates. However, NRIs are not permitted to invest in bearer securities like Indira Vikas Patra/Kisan Vikas Patra.
Ans. Yes, provided the transfers/sales are arranged through an authorised dealer. Units can, however, be repurchased directly by UTI.
Ans. If such securities were purchased out of funds remitted from abroad or out of NRE/FCNR accounts, sale/maturity proceeds can be repatriated. Sale/maturity proceeds of securities purchased out of funds in NRO accounts can only be credited to NRO accounts and cannot be remitted abroad. Interest earned during the financial .