Permitted Accounts in India for NRIs and PIOs

In terms of Regulation 2 of FEMA Notification No.13 dated May 3, 2000, Non-Resident Indian (NRI) means a person resident outside India who is a citizen of India. A person of Indian Origin (PIO) means a citizen of any country other than Bangladesh or Pakistan who had (a) at any time held an Indian passport or (b) he or either of his parents or any of his grandparents was a citizen of India under the Constitution of India or the Citizenship Act, 1955 or (c) the person is a spouse of an Indian citizen or a person referred to in (a) or (b).

Clarification: It has been clarified in the Exchange Control Manual (ECM) that Indian Citizens who proceed abroad for business visits, medical treatment, or study that do not indicate their intention to stay outside India for an indefinite period will be considered “person resident in India” during their temporary absence from India. Persons posted in U.N. Organisations 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 certain facilities.

A ‘Person of Indian Origin (PIO)’ is a person resident outside India who is a citizen of any country other than Bangladesh or Pakistan or such other country as may be specified by the Central Government, satisfying the following conditions:

Who was a citizen of India under the Constitution of India or the Citizenship Act, 1955 (57 of 1955); or

Who belonged to a territory that became part of India after the 15th day of August 1947; or

Who is a child or a grandchild or a great-grandchild of a citizen of India or a person referred to in clause (a) or (b); or who is a spouse of foreign origin of a citizen of India or spouse of foreign origin of a person referred to in clause (a) or (b) or (c)

A PIO will include an ‘Overseas Citizen of India’ cardholder within the meaning of Section 7(A) of the Citizenship Act, 1955. Such an OCI Card holder should also be a person resident outside India.

NRIs/ PIOs can hold jointly with a resident relative on a ‘former or survivor’ basis (relative as defined in Companies Act, 2013). The resident relative can operate the account as a Power of Attorney holder during the lifetime of the NRI/ PIO account holder.

NRIs and PIOs are permitted to open the following types of deposits in India

NRE Savings,

NRE Current Account,

NRE Recurring,

NRE Fixed Deposit

FCNR (B): [Foreign Currency Non-Resident (Bank)].

Tenure of NRE fixed deposits: From one to three years, however, banks are allowed to accept NRE deposits above three years from their Asset-Liability point of view 

Tenure of FCNR (B): For terms not less than 1 year and not more than 5 years     

Tenure of NRO: As applicable to resident accounts.

Permissible credit to NRE/ FCNR (B) Accounts:

Credits to NRE /FCNR (B) deposits are permitted only through inward remittance from outside India, interest accruing on the account, investment interest, transfer from other NRE/ FCNR(B) accounts, maturity proceeds of investments (if such investments were made from this account or through inward remittance). Current income like rent, dividend, pension, interest, etc. will be construed as a permissible credit to the NRE account. [Care: Only those credits permitted which have not lost repatriable characters]

Operations by Power of attorney: The operations in these accounts by Power of Attorney are restricted to withdrawals for permissible local payments or remittances to the account holder himself through normal banking channels. Permissible debits are local disbursements, remittances outside India, transfers to other NRE/ FCNR (B) accounts, and investments in India.   

Note: FCNR (B) deposits can be opened in Term deposits only (RD account not allowed). The difference between NRE Deposits and FCNR (B) deposits is explained in the following post.   

DIFFERENCE BETWEEN FCNR (B) AND NRE DEPOSITS

NRO A/Cs:

Inward remittances from outside India, legitimate dues in India, and transfers from other NRO accounts are permissible credits to the NRO account. Inward remittances from outside India, legitimate dues in India, and transfers from other NRO accounts are permissible credits to the NRO account. A Rupee gift/ loan made by a resident to an NRI/ PIO relative within the limits prescribed under the Liberalised Remittance Scheme may be credited to the latter’s NRO account. The account can be debited for local payments, transfers to other NRO accounts, or remittance of current income abroad. Apart from these, balances in the NRO account cannot be repatriated abroad except by NRIs and PIOs up to USD 1 million, subject to conditions specified in Foreign Exchange Management (Remittance of Assets) Regulations, 2016. Funds can be transferred to the NRE account within this USD 1 Million facility.

Operations in the account in terms of Power of Attorney are restricted to withdrawals for permissible local payments in rupees, remittance of current income to the account holder outside India, or remittance to the account holder himself through normal banking channels. While making remittances, the limits and conditions of repatriability will apply.

Read: WHY THE NRIS NEED NRO ACCOUNTS?

Any person outside India can open an SNRR account with an authorised dealer bank in India with a business interest in India. This account is required to carry out bonafide transactions in rupees that conform with the FEMA Act’s provisions, rules, and regulations made thereunder. However, the Opening of SNRR accounts by Pakistan and Bangladesh nationals and entities incorporated in Pakistan and Bangladesh requires prior approval of the Reserve Bank. Read: SPECIAL NON-RESIDENT RUPEE ACCOUNT: SNRR ACCOUNT IN INDIA

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