FAQ's

An Indian citizen who stays abroad for employment/carrying on business or vocation outside India or stays abroad under circumstances indicating an intention for an uncertain duration of stay abroad is a non-resident. (Persons posted in UN organizations and officials deputed abroad by Central/State Governments and Public Sector undertakings on temporary assignments are also treated as non-residents). Non-resident foreign citizens of Indian origin are treated on par with non-resident Indian citizens (NRIs).

For the purposes of availing of the facilities of opening and maintenance of bank accounts and investments in shares/securities in India: A foreign citizen (other than a citizen of Pakistan or Bangladesh) is deemed to be of Indian origin, if,

1. he, at any time, held an Indian passport, or 2. he or either of his parents or any of his grand parents was a citizen of India by virtue of the Constitution of India or Citizenship Act, 1955 (57 of 1955).

Note : A spouse (not being a citizen of Pakistan or Bangladesh) of an Indian citizen or of a person of Indian origin is also treated as a person of Indian origin for the above purposes provided the bank accounts are opened or investments in shares/securities in India are made by such persons only jointly with their NRI spouses.

For investments in immovable properties
A Foreign citizen (other than a citizen of Pakistan, Bangladesh, Afghanistan, Bhutan, Sri Lanka or Nepal), is deemed to be of Indian origin if,

1. he held an Indian Passport at any time, or 2. he or his father or parental grand-father was a citizen of India by virtue of the Constitution of India or the Citizenship Act, 1955 (57 of 1955)

Overseas Corporate Bodies (OCBs) are bodies predominantly owned individuals of Indian Origin or nationality resident outside India and include overseas companies, partnership firms, societies and other corporate bodies which are owned, directly or indirectly, to the extent of at least 60% by individuals of Indian nationality or origin resident outside India as also overseas trusts in which at least 60% of the beneficial interest is irrevocably held by such persons. Such ownership interest should be actually held by them and not in the capacity as nominees. The various facilities granted to NRIs are also available with certain exceptions to OCBs so long as the ownership/beneficial interest held in them by NRIs continues to be at least 60%.

Q4. Are OCBs required to produce any certificate regarding ownership/beneficial interest in them by NRIs?

Yes. In order to establish that the ownership/beneficial interest in any OCB held by NRIs is not less than 60%, the concerned body/trust is required to furnish a certificate from an overseas auditor/chartered accountant/certified public accountant in form OAC where the ownership/beneficial interest is directly held by NRIs and further that such ownership interest is actually held by them and not in the capacity as nominees.

2 Investments in securities/shares of, and deposits with, Indian firms/companies.

Banks holding authorised dealers' licences (i.e. banks authorised to deal in foreign exchange) or banks specifically authorised in this behalf by Reserve Bank of India can only maintain accounts in the name of NRIs.Our bank is a full fledged authorised dealer.

Q2. Are NRIs permitted to maintain accounts in rupees and in foreign currency?

Yes. Accounts can be maintained by NRIs in rupees as well as in foreign currency. Accounts in foreign currency.

Q3. Can NRIs maintain current/savings/fixed deposit rupee accounts with authorised dealers/authorised banks in India?

NRO and NRE accounts accounts can be maintained in current/savings/fixed deposit form while NRNR accounts can be only in fixed term deposits.

Q4. What are the different types of rupee accounts permitted to be maintained?

Three types of rupee accounts viz. Non-resident (External) Rupee Accounts - NRE, Non-resident (Ordinary) Rupee Accounts - NRO, and Non-resident (Non-repatriable) Rupee deposit accounts - NRNR are permitted to be maintained.

Q5. Can proceeds of foreign currency notes/travellers cheques be credited to NRE accounts without any restriction?

Our Bank has 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 US$ 2,500 or its equivalent or the total amount tendered i.e. currency notes and travellers cheques, are in excess of US$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.

Q6. Can NRE accounts be opened by the power of attorney holder in India on behalf of a non-resident?

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.

Q8. Can Power of Attorney holder credit proceeds of foreign currency notes/bank notes and travellers cheques to the NRE accounts?

Balances held in NRE accounts can be repatriated abroad freely, whereas funds in NRO account cannot be remitted abroad but 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 which do not qualify, under the Exchange Control regulations, for remittance outside India are required to be credited to NRO accounts.

In the case of NRE accounts, the interest rates for deposits up to one year should not exceed Reserve Bank of India rate minus 2 percentage points. Interest rates on term deposits fo over one year are determined by the banks themselves. Interest rates on NRO accounts are fixed as in the case of domestic deposits.

Q12. Are debits and credits to NRO accounts allowed freely by banks maintaining the accounts?

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 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. are eligible to be remitted abroad.

Funds held in NRE accounts can be repatriated abroad freely. Funds held in NRO accounts which would generally be from a local source cannot be repatriated outside India. Interest earned on funds in NRO accounts during the financial year 1994-95 and onwards can, however, be remitted to the extent permitted by Reserve Bank (See answers to questions 59 and 60).

Q15. Can funds in NRE/NRO accounts be utilised for payment of air fare to/from/in India of the account holder and/or his dependents?

Yes. Bank can 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.

Yes. Bank may allow such over drawings up to Rs. 1000/- subject to the condition that the over drawings together with the interest payable thereon are cleared within a period of two weeks.

Q17. Are NRO/NRE/NRNR account holders eligible for loans/overdrafts against their fixed deposits?

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 utilized for investments in India on non-repatriation basis, in certain specified areas and for acquisition of flats/houses subject to prescribed conditions.

While interest on loans up to Rs.2 lakhs against NRO/NRE fixed deposit accounts will be charged two percent above the rates paid by banks for the concerned deposits, repayment of loans will have to be made either by adjustment of the deposits or by fresh remittances from abroad. Bank shall decide interest on loans above Rs. 2 lakhs.

Q19. Can loans raised against NRE fixed deposits be repaid out of funds in NRO Accounts?

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.

Q21. Is repatriation of funds belonging to non-residential nominees permitted?

Q22. Is transfer of funds between NRE accounts maintained by two different account holders permitted?

Q23. At what rates are remittances to India by NRIs for credit to NRE/NRO/NRNR accounts converted into rupees?

Remittances made for credit to rupee accounts (i.e. NRE/NRO/NRNR accounts) maintained by NRIs are converted at market rate.

Q24. Is there any scheme under which non-residents other than NRIs can also keep rupee deposits with banks in India?

Q25. How should an account under the Non-resident Non-repatriable (NRNR) Rupee deposit Scheme be opened?

Such an account can be opened with our Bank 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 our Bank.

Q27. Can the principal or the interest accrued on NRNR deposits be repatriated outside India at any time?

The principal amount of the deposit is not eligible for repatriation. Interest earned upto 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.

Q28. Can the principal together with the interest accrued on NRNR deposits be renewed, on maturity?

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.

Q29. Can loans/overdrafts be availed of against the security of these deposits?

Yes. Bank has been permitted to grant loans/overdrafts for purposes other than investment.

Q30 What is the status of NRO/NRE accounts on the return of the account holder to India?

The Bank has been advised to redesignate such accounts as resident accounts on return of the account holder to India.

Q31 Does the account holder suffer any loss of interest on such redesignation of accounts?

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 the conversion into resident rupee account.

Yes. Accounts in foreign currencies (FCNR accounts) can be maintained by NRIs with our Bank.

Q33. What are the foreign currencies in which such accounts can be maintained?

FCNR accounts can be maintained in Pound Sterling, US Dollar, Deutsche Mark and Japanese Yen.

Q34. Are FCNR accounts permitted to be maintained in the form of current/savings accounts?

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.

Q35. What is the maximum period of maturity for a FCNR term deposit account?

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.

Q38. If a FCNR deposit of six months maturity is withdrawn prematurely, would any interest be payable?

No. While the premature withdrawal would be allowed, no interest would be payable.

Q39. Are the interest rates on FCNR deposits liable for periodical revisions?

Yes. The Bank has been permitted to offer interest on such deposits at rates not more than the LIBOR prevailing on the last working day of the previous week for the relevant maturity and currency.

Debits for local payments in Rupees are allowed freely. As regards debits for investments in India, please see Chapter III and IV.

Q44 A. What is the status of FCNR accounts on the return of the account holder to India?

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.

Q1. Are any tax concessions available to NRIs on balances/deposits held in NRE/FCNR accounts?

Yes. Income from interest on moneys standing to the credit of NRE/FCNR accounts is exempt from Income-tax. Gifts from such accounts to close relatives are also free of Gift-tax.

Q2. Are similar concessions available in respect of balance held in NRO accounts?

They enjoy the following tax benefits.Income from the deposits will be free from Indian Income-tax. The deposit will also be exempt from Gift tax for one time gifting (in the case of NRIs only). Exemption from Income-tax will not be available to resident donee and those residents, who being joint holders, become owners of the deposit as survivor of the non-resident depositor.

Tax Exemption on interest earned on deposits held in foreign currency is available to non-residents and persons who are not ordinarily resident in India as defined under Income-tax Act, 1961.

The approved method of sending remittances into India is through normal banking channels.

Q6. At what rates are remittances in foreign currencies made by NRIs converted by banks into rupees?

Q7. Can remittances be sent into India otherwise than through the medium of a bank in the country of residence of the remitter?

Yes. Exchange houses in the Gulf countries have been permitted to send remittances into India by means of DDs, MTs and TTs drawn on banks in India.

Yes. Exchange Houses can draw drafts in US Dollars or Pound Sterling on a limited number of branches of the drawee bank in India, if they have entered into such an arrangement with the drawee bank.

Q9. Can NRIs remit funds through Exchange Houses for investment in Government securities, National Savings Certificates and Units of Unit Trust of India?

Q10. Can NRIs remit funds through Exchange Houses for investment in shares/debentures of Indian companies?

Yes, subject to general/specific permission of Reserve Bank for such investment.

Q11. Can NRIs send drafts issued by Exchange Houses for acquisition of residential flats in India?

Yes. NRIs can send drafts issued by Exchange Houses in favour of co-operative housing societies/estate developers for acquisition of residential flats in India in individual names.

Q12. Can NRIs remit premia on policies issued by the Life Insurance Corporation of India by means fo drafts issued by Exchange Houses in favour of the Corporation?

Q13. Can NRIs remit tuition/boarding/examination fees for their children studying in India by means of drafts issued by Exchange Houses in favour of school, colleges, universities, technical and educational institutions in India?

Q14. Can NRIs take out of India precious stones or jewellery purchased by them during their visit to India?

Yes. NRIs can take out of India precious stones and jewellery (both gold and non-gold) purchased by them in India, without any limit, provided the purchase is made against payment in any convertible foreign currency.

Q15. Can assets held in India by NRIs prior to their becoming non-resident be repatriated outside India?

Q16. Can NRIs take out of India household articles such as carpets curios etc. purchased out of funds in NRO accounts during their temporary visit to India?

Yes. RBI permits on application such requests received from NRIs up to the value of Rs. 20,000 for such articles (other than those made of gold or silver or those banned for exports).

Frequently Asked Questions(FAQ’s)

GENERAL| ACCOUNT SERVICES | MISCELLANEOUS