This document discusses various bank accounts available to Non-Resident Indians (NRIs). It describes NRE accounts which can be used to deposit foreign earnings and are tax-free. NRO accounts are for depositing Indian earnings and the interest earned is taxable. The key differences between NRE and NRO accounts are discussed. FCNR accounts allow NRIs to deposit foreign currency funds for a fixed term period and any balance can be freely repatriated. SNRR accounts are for NRIs with business interests in India to facilitate rupee transactions related to their business.

1. Non-Resident Accounts
Prepared BY
Mohammed Jasir PV
Asst. Professor
MIIMS
Contact No: 9605 69 32 66

2. Non-resident Accounts
• Repatriable and Non Repatriable A/c
• Significance for the Economy and Bank

3.  A ‘Non-resident Indian’ (NRI) is a person resident outside India who is a
citizen of India
 Overseas Indians, officially known as Non-Resident Indians (NRI/NRIs)
 As per section 6 of the Income-tax Act of 1961
 “Residence in India" requires stay in India of at least 245 days in a
financial year or 365 days spread out over four consecutive years and at
least 60 days in that year
Who is an NRI?

4.  PERSON OF INDIAN ORIGIN (PIO)
 A Person of Indian Origin (PIO) means a foreign citizen (except a national of
Pakistan, Afghanistan Bangladesh, China, Iran, Bhutan, Sri Lanka and Nepal)
 Who at any time held an Indian passport Or
 Who or either of their parents/ grand parents/ great grand parents was born and
permanently resident in India as defined in Government of India Act, 1935 and
other territories that became part of India thereafter provided neither was at any
time a citizen of any of the aforesaid countries ( as referred above) Or
 Who is a spouse of a citizen of India or a PIO

5. Non-resident Accounts
• Repatriable and Non Repatriable A/c
• Significance for the Economy and Bank

6.  Non-Resident (External) Rupee Account [NRE]
 Non-Resident (Ordinary) Rupee Account [NRO]
 Foreign Currency (Non-Resident) Account [FCNR]
Different NRI Accounts

7.  It is the one where an NRI can deposit foreign and Indian Rupees
and withdraw in Indian Rupees
 So if an NRI is having some rental income, dividend income or any
other income in India that's on a regular basis, the same can be
deposited in his NRO account
 It is an account of an NRI to manage the income earned in India
NRO - Non Resident Ordinary Account

8.  An NRE account is a bank account opened in India in the name of an NRI,
to park his foreign earnings
 Type of Account - Savings, Current, Recurring, Fixed Deposit
 Can deposit in foreign currency, and withdraw in Indian currency
 Tax free (Principle + Interest)
 Nomination Permitted
 Can repatriate (Principle + Interest)
 Joint NRE account only with another NRI
 Exchange rate risk will be there
 Account is denomination = INR
Non-Resident (External) Rupee Account [NRE]

9. Factors NRE Account NRO Account
Purpose Earnings from foreign Earnings from India
Taxability Interest earned is tax free Interest earned is taxable
Repatriability Can repatriate Can repatriate the interest
(Principle within limits)
Joint Account Only with NRI Indian citizen or another NRI
Deposits and
Withdrawals
Deposit = Foreign currency
Withdraw = Indian Rupee
Deposit = Foreign currency
+ Indian currency
Withdraw = Indian Rupee
Exchange Rate Risk Prone to risk Not prone to risk
The difference between NRE and NRO Account

10.  An NRE account is a bank account opened in India in the name of an NRI,
to park his foreign earnings; whereas, an NRO account is a bank account
opened in India in the name of an NRI, to manage the income earned by
him in India. These incomes include rent, dividend, pension, interest,
etc.
 NRE accounts are exempt from tax. Neither the balance, nor the interest
earned on these accounts is taxable. The interest earned on an NRO
account is however taxable at 30% according to the Income Tax Act
1961.
 An NRI can open a joint NRO account with one or more NRIs or Indian
citizens. However, there can be a joint NRE account only with another
NRI.

11.  The principle amount in an NRE account, and the interest accumulated thereon
is open to repatriation. In other words, you can transfer these amounts to a
foreign account in case of an NRE account. In case of an NRO account, the
interest amount can be repatriated; however, in case of the principle amount,
you can remit only up to USD 1 million in a financial year.
 Income originating outside India can be deposited into any of these accounts.
However, income originating within India can be deposited only into the NRO
account. Withdrawals from both the accounts can be made only in INR.
 In case of an NRO account, if the deposit as well as the withdrawal is made in
INR, there is no exchange rate risk involved; whereas, in case of an NRE account,
currency fluctuations make you prone to exchange rate risks.

12.  Type of Account - Savings, Current, Recurring, Fixed Deposit
 Interest earned is taxable
 Can repatriate the interest amount, the principle amount can be
repatriated within the set limits
 Can be opened by an NRI along with an Indian citizen or another NRI
 Can deposit in foreign and Indian currency, and withdraw in Indian
currency
 Not prone to risk
Features

13.  An FCNR Account is a fixed term bank account that can be opened in India by
an NRI or a person of Indian origin (PIO) to transfer their foreign income in the
same currency
 These accounts can be opened and maintained in 6 different currencies
• Pound Sterling (GBP)
• Euro (EUR)
• USD
• Japanese Yen (JPY)
• Australian Dollar (AUD)
• Canadian Dollar (CAD)
 Any balance in this account can be freely repatriated
 Tax free

14.  The minimum tenure of these fixed deposits is 1 year
 The maximum tenure is 5 years
 Premature withdrawals are subjected to penalties or interest free
 The Reserve Bank of India allows the FCNR account holder to avail a loan
against his account for personal or business purposes
 However, a loan cannot be taken for the following purposes:
 Re-lending
 Speculative purpose
 Agricultural or plantation activities
 Real estate investment

15.  There can be a joint FCNR account with another NRI
 While opening an FCNR account, you are required to furnish the following
documents that must be attested by a Banker/Notary/Embassy or Consulate
official:
• Passport photocopy
• Visa photocopy
• Overseas address proof
 Nomination facility is available in case of FCNRs
 These accounts can be opened with:
 Funds from an existing FCNR account
 Foreign currency notes and Travelers cheque

16.  Any NRI, having a business interest in India, can open a SNRR account with
an authorised dealer for the purpose of putting through bona fide
transactions in rupees which are in conformity with the provisions of the
Act, rules and regulations made there under
 Type of Account = Non-interest bearing
 Repatriable
 Permissible Transactions = Debits and credits specific/ incidental to the
business proposed to be done by the account holder
 Tenure = Concurrent to the tenure of the contract / period of operation /
the business of the account holder and in no case should exceed seven
years, other than with approval of the Reserve Bank.

17. Thank You