Operation of Banking

NRO/ NRE/ FCNR - We've got your back

A NRI may hold bank accounts in India only with an AD bank. The AD Bank in India may accept deposits from NRIs under the following schemes:

  • Non-Resident (External) Account (NRO) Scheme in Indian Rupees;

  • Non-Resident (Ordinary) Account (NRE) Scheme in Indian Rupees;

  • Foreign Currency Non-Resident (FCNR) in Foreign Currency;

  • Special Non-Resident Rupee Account (SNRR).

Banking Accounts1.PNG

1 In this FEMA regulation, PIOs do not include nationals of Pakistan and Bangladesh

2 Individuals/ entities of Pakistan and entities of Bangladesh require prior approval of relevant authorities.

Permissible transactions in NRE a/c and FCNR a/c:

Banking Accounts2.png

Permissible transactions in SNRR a/c:

  • SNRR a/c can be opened only if a person resident outside India has business interest in India.

  • The debits and credits in SNRR a/c should be specific/ incidental to the business proposed to be done by the account holder.

  • Transfers from NRO a/c to SNRR a/c are prohibited.

  • The tenure of SNRR a/c should be concurrent to the tenure of the contract/ period of operations/ business of the account holder and in no case the period should exceed 7 years from the date of opening of the account.

Permissible transactions in NRO a/c:

Banking Accounts3.png

Points to Remember:

  • An Individual cannot continue to hold a Resident a/c when he becomes a Person Resident outside India for permanent settlement. He must immediately inform the banker and redesignate the said a/c into a NRO a/c. The onus is on the individual to inform the bankers.

  • AD Banks can issue International Credit Cards to NRIs/ PIOs without prior approval of RBI. Such transactions may be settled by inward remittance or out of balances held in the cardholder’s NRO/ NRE/ FCNR a/c.

  • Disadvantage of NRE a/c for customers in that if Rupee depreciates, savings of the person converted in US $ reduces. FCNR a/c can be maintained in foreign currency.

  • Redesignation of bank accounts is one of the first steps that a person leaving India or returning to India should take. If your Residential Status under FEMA changes, please inform your AD Bank at the earliest. If you are unsure of what to do, feel free to post a query.

Frequently asked questions

A NRI holds NRO, NRE and FCNR a/c with a Bank. He intends to add his sister a resident Indian as a joint holder to his savings a/c. Is it permissible?

Yes. NRO a/c can be maintained jointly with resident of India, irrespective whether the resident is a relative (as per the Companies Act) or not. On the other hand NRE and FCNR a/c can be maintained jointly with resident relative only.

Can the NRI’s sister operate his Bank accounts?

No. During the lifetime of the NRI, the sister shall be eligible to operate the account only if she is a POA holder as per the instructions of the NRI/ PIO account holder. Operations in the FCNR, NRE and NRO a/c by his sister is restricted to the following:

  • Withdrawals for permissible local payments including payments for eligible investments subject to relevant compliances
  • Remittance to the account holder himself through normal banking channels.

Whether NRO, NRE and FCNR a/c can be opened by a resident POA holder?

NRO, NRE and FCNR a/c cannot be opened by resident POA holder in India on behalf of NRI.

Are NRIs permitted to be joint holders to the accounts held by resident Indians?

Yes. Relatives (as per the Companies Act) who are NRIs are permitted to be joint holders in existing / new resident bank accounts with the resident account holder on “Either or Survivor” basis as per the conditions prescribed.

Can NRI account holders avail Rupee loans in India from Banks against security of funds held in their NRO a/c?

Yes. The loan can be utilized for personal and business purposes except for the purpose of ‘relending’ or for carrying on agriculture, plantation activities or for investment in real estate business.

Can NRIs avail loans outside India against security of funds held in their FCNR / NRE a/c?

Yes, NRIs can avail loan from branches / correspondent Banks outside India for bonafide purposes.

Can a NRI overdraw his NRE a/c?

Banks may at their discretion/ commercial judgment allow over drawings in NRE a/c up to a limit of Rs.50,000/- subject to the condition that such over drawings together with the interest payable thereon are cleared/repaid within a period of two weeks, out of inward remittances through normal banking channels or by transfer of funds from other NRE/ FCNR a/c.