Non-Resident Accounts 1 Ashit Hegde

Non-Resident (external) Rupee account. – Popularly known as NRE a/c, this a/c is maintained as a Savings a/c or as a Term Deposit a/c. Current a/cs are also permitted. Only NRIs and PIOs are permitted to open this a/c. Permitted Credits – Remittance from abroad. NRI’s Indian income (e.g. rent, dividends, pension etc.) Transfer from other NRE and FCNR a/cs. 2 Ashit Hegde

Repatriation  Freely permitted Local Payments  Freely permitted Exchange Risk  Borne by the NRI/PIO Rate of interest (w.e.f March 1 st, 2014) Should not be higher than comparable domestic deposit. 3 Ashit Hegde

Non-Resident Ordinary A/c (NRO) Maintained in INR as savings, current, recurring and term Deposits. Permissible credits – Remittance from abroad. Legitimate dues in India. E.g. Rent dividend, interest etc. Sale proceeds of assets including immovable property. Gifts or loans from close relative residents up to USD 75,000/- under LRS permitted. 4 Ashit Hegde

Permitted Debits – All local payments. Remittance outside India of current Income..subject to Income Tax. Remittance up to USD one million per F.Y. Foreign Nationals of Non-Indian origin visiting India may open NRO A/cs using funds brought from abroad. 5 Ashit Hegde

Foreign Currency Non-Resident (B) Deposits {FCNR (B) Deposits} Eligible Depositors - NRIs and PIOs Currencies - USD,GBP,EURO,JPY,AUD,CAD Nature of A/c - Only Term Deposits Period - Minimum - One year Maximum – Five years 6 Ashit Hegde

Rate of Interest Ceiling Rates 1 year to less than 3 yearsLIBOR plus 200 basis points. 3 years to 5 years LIBOR plus 300 basis points(w.e.f March 1, 2014) Periodicity of Payment - At intervals of 180 days. Compounding permitted. 7 Ashit Hegde

Prepayment - No interest is payable if prepaid before one year. After one year, prepayment will be subject to penal interest. Loans against Deposit - Permitted. Banks are free to decide interest rate. Repatriation - Principal and interest freely permitted 8 Ashit Hegde

On depositors permanent return to India - If desired by the depositor, the deposit may continue till maturity in the same currency at the contracted interest rate. A resident can continue to hold, own, and transfer Foreign Security or immovable property situated outside India which was acquired when he was resident outside India. 9 Ashit Hegde

Exchange Earners’ Foreign Currency A/c (EEFC) Meant for – Resident persons who are earning Forex. Nature of a/c – Current a/c. Objectives served – To save on conversion/ transaction costs. Eligible Credits – 100% of Forex 10 Ashit Hegde

Utilisation – For all approved purposes. E.g. Import bill retirement, Outward Remittances, PCFC Liquidation. Conditions – No credit facility against EEFC balance. Net balance at the end of the month should be converted into INR before the end of succeeding month The a/c is not intended to enable Forex earners to maintain assets in F.CY. 11 Ashit Hegde

Remittance Facilities to Non-Resident Indians/PIOs Remittance of Current Income – Like dividend, pension, rent etc is permitted subject to CA certificate regarding payment of Taxes. Remittance of Sale Proceeds of Assets - Permitted up to USD1.0 Mio per F.Y. (property acquired out of Rupee funds as resident) subject to tax clearance/NOC from Income Tax authority. 12 Ashit Hegde

Inherited Property – Inheritance  Permitted subject to documentary evidence, CA certificate Settlement /Gift  Under USD 1.0 Mio limit. Property purchased out of Forex – Permitted for two properties. Balance under USD1.0 Mio limit Note: Students going abroad for studies are treated as NRIs. 13 Ashit Hegde

Reporting – All remittances abroad (i.e. repatriation) from NRO a/cs have to be reported by to RBI, Mumbai within 7 days from the end of the month in the prescribed format. Ashit Hegde 14