Can a NRI open a bank account in India?
One of the growing concerns among individuals is with regards to operational changes that may come into effect when a person shifts outside India without giving up his/her Indian citizenship. In this article, we seek to answer basic queries around the prevailing norms related to opening and maintaining a bank account in India by a non-resident Indian (NRI).
An NRI can open a bank account India, however, there are certain guidelines that are issued by the Reserve Bank of India (RBI) with regards to the NRI bank accounts. Per RBI, following accounts may be opened by an NRI and operated in India:
- 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)
Let us discuss each of the accounts and their features, specifications, requirements, eligibility criteria etc. in details.
One of the most popular bank accounts among the NRI community is the NRE account. NRE account may be opened with a bank by individuals who are citizens of India but reside outside India and also foreign citizens with Indian origin also known as Persons of Indian Origin (PIO). The account type can be savings, current, fixed or recurring deposit account. The allowed debits and credits in the account are illustrated as under:
Transfers with NRE accounts of self and others are also permitted. The account can be opened in both single or join mode with other NRIs or PIOs. NRIs are also allowed to hold a joint account with a relative who is residing in India, however, this is subject to relative holding the power of attorney from the NRI concerned.
FCNR (B) account
NRIs and PIOs are allowed to open and maintain FCNR (B) account with any bank in India. However, this account can be held only as a fixed deposit account in freely convertible foreign currency. Features of this account include:
NRO account can be opened by any non-resident including foreign nationals unlike NRE account and FCNR (B) account that can be opened by NRI and PIO only. This is meant for carrying out bonafide rupee transactions. Thus, any foreign national coming to India for employment purpose or as a tourist can open an NRO account. Funds remitted from outside India or exchange brought to India can be used to open an account. Type of account can be current, savings, current, fixed or recurring deposit account.
In terms of operating of the account, NRIs can jointly hold an NRO Account with residents provided the residents hold the power of attorney. Also, NRIs and PIOs may hold account jointly with other NRIs and PIOs.
Features of this account include:
One of the facilities that are provided for NRO account is that a foreign national may designate his rupee denominated account as an NRO account at the time of departure from India upon completion of employment. However, upon conversion, like any other NRO account, it can be used only for the collection of bona fide dues in India, for example, withdrawal from the provident fund and any other pending dues from an employer. The receipt of such funds needs to be within the limit of $1 million per financial year.
NRI having any business interest in India may open an SNRR Account for conducting bona fide transactions in rupees. While the funds in SNRR account can be withdrawn fully, there is no interest in SNRR account and it can opt for a period of maximum 7 years.
- Interest in NRE and FCNR (B) account is tax-free
- Interest earned on NRO account is taxable in India
- Remittances made outside India from NRE, FCNR (B) or NRO Account needs to made net of applicable taxes.
- During 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 banker. These requirements are to confirm that all applicable taxes are deducted and/or deposited into the government treasury.
- NRI holding NRO and NRE accounts in India can continue to hold the accounts upon returning to India after getting these account converted to be designated as a resident rupee account.
- Interest earned from investments made in India can be repatriated provided the interest is deposited in NRE account and the investment was made from NRE account. The funds can be freely transferred to overseas account after payment of adequate taxes.
*Individuals /entities of Bangladesh/ Pakistan nationality/ ownership require prior approval of RBI
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