This document discusses various types of bank accounts that can be opened by resident individuals, non-resident Indians (NRIs), and other entities under India's foreign exchange regulations. It provides details on Non-Resident External (NRE) accounts, Foreign Currency Non-Resident (Bank) (FCNR-B) accounts, and Non-Resident Ordinary (NRO) accounts including eligibility, permitted credits and debits, interest rates, and loans against deposits in these accounts. The document also compares key features of NRE, FCNR-B and NRO accounts and specifies permitted purposes for loans from these accounts.

1. Deposit Regulations
Foreign Exchange Management Act, 1999
Institute of Chartered Accountants of India
Two Day seminar of FEMA
19TH and 20th Dec 2014
Presentation by: CA. Sudha G. Bhushan
Director – Taxpert Professionals
Sudha@taxpertpro.com

2. Account that can be
opened by Resident
Individuals
Exchange Earners
Foreign Currency
account
Resident Foreign
Currency account
Resident Foreign
Currency (Domestic)
Account
Account that can be
opened by Non
resident Indians
Non Resident
(External) Account
Foreign Currency
(Non Resident) Bank
Account
Non
resident(ordinary)
account
Bank account by
corporates
Bank Account
outside India
Foreign Currency
account in India
Bank account by
Other Entities
Foreign Institutional
Investors
Qualified Foreign
Investors
Foreign Venture
capital investors and
others
Various Kind of Bank Accounts
Discussed in detail

3. TYPES OF ACCOUNTS – NRI/PIOs

4. Types of deposits – NRI/PIO
Non-resident (External) Account Scheme
(‘NRE account’)
Foreign Currency (Non-Resident) Account
Banks Scheme (‘FCNR – B account’)
Non-Resident (Ordinary) Account Scheme
(‘NRO account’)

5. • Regulations – FEMA 5/2000-RB on Foreign
Exchange Management (Deposit) Regulations,
2000 amended from time to time
REGULATORY FRAMEWORK
NRE A/C
SCHEDULE 1
FCNR - B A/c
SCHEDULE 2
NRO A/c
SCHEDULE 3

6. NON-RESIDENT (EXTERNAL) ACCOUNT
SCHEME (‘NRE ACCOUNT’)
NRIs and PIOs -
eligible to open
Rupee
Denominated
savings, current or
fixed deposit
Can be opened by
remittance of
funds in free
foreign exchange.
Principal and
interest both -
Repatriable
Interest lying to the
credit of NRE
accounts - exempt
from tax

7. Credits Debit
 Inward remittance to India in permitted currency
 proceeds of account payee cheques, demand
drafts / bankers' cheques, issued against
encashment of foreign currency
 transfers from other NRE / FCNR accounts
 sale proceeds of FDI investments
 interest accruing on the funds held in such
accounts
 interest on Government securities/dividends on
units of mutual funds purchased by debit to the
NRE/FCNR(B) account of the holder, certain types
of refunds, etc.
 local disbursements
 transfer to other NRE / FCNR accounts of person
eligible to open such accounts,
 remittance outside India,
 investments in shares / securities/commercial
paper of an Indian company, etc.
PERMISSIBLE DEBITS/CREDITS

8. NON RESIDENT (ORDINARY) RUPEE
ACCOUNT
NRIs and PIOs
Rupee
Denominated
Savings, Current or
Fixed Deposit
Can be opened
jointly with
residents
NON –
Repatriable*
Interest lying to the
credit of NRO
accounts is taxable
*repatriable subject to conditions

9. Credits Debit
 Proceeds of remittances from outside India through
normal banking channels received in any permitted
currency.
 Any foreign currency, which is freely convertible,
tendered by the account holder during his temporary
visit to India.
 Transfers from rupee accounts of non-resident banks.
 Legitimate dues in India of the account holder. This
includes current income like rent, dividend, pension,
interest, etc.
 Sale proceeds of assets including immovable property
acquired out of rupee / foreign currency funds or by way
of legacy /inheritance.
 Resident individual may make a rupee gift to a NRI/PIO
who is a close relative of the resident individual [close
relative as defined in Section 6 of the Companies Act,
1956] by way of crossed cheque /electronic transfer. The
amount shall be credited to the Non-Resident (Ordinary)
Rupee Account (NRO) a/c of the NRI / PIO and credit of
such gift amount may be treated as an eligible credit to
 All local payments in rupees including payments for
investments in India subject to compliance with the
relevant regulations made by the Reserve Bank.
 Remittance outside India of current income like rent,
dividend, pension, interest, etc. in India of the account
holder.
 Remittance up to USD one million, per financial year
(April- March), for all bona fide purposes, to the
satisfaction of the Authorised Dealer bank.
 Transfer to NRE account of NRI within the overall
ceiling of USD one million per financial year subject to
payment of tax, as applicable
PERMISSIBLE DEBITS/CREDITS

10. FOREIGN CURRENCY NON RESIDENT
(BANKS) ACCOUNT
NRIs and PIOs are
eligible to open
Denominated in
Foreign Currency
Only in the form of
term deposit
Accounts can be
opened by remittance
of funds in free
foreign exchange.
Repatriable
Risk of foreign
exchange fluctuations
borne by Bank

11. Credits Debit
 Inward remittance to India in permitted currency
 proceeds of account payee cheques, demand
drafts / bankers' cheques, issued against
encashment of foreign currency
 transfers from other NRE / FCNR accounts
 sale proceeds of FDI investments
 interest accruing on the funds held in such
accounts
 interest on Government securities/dividends on
units of mutual funds purchased by debit to the
NRE/FCNR(B) account of the holder, certain types
of refunds, etc.
 local disbursements
 transfer to other NRE / FCNR accounts of person
eligible to open such accounts,
 remittance outside India,
 investments in shares / securities/commercial
paper of an Indian company, etc.
PERMISSIBLE DEBITS/CREDITS – FCNR
(B) A/C

12. Particulars Foreign Currency (Non-
Resident) Account (Banks)
Scheme [FCNR (B) Account]
Non-Resident (External)
Rupee Account Scheme
[NRE Account]
Non-Resident Ordinary
Rupee Account Scheme
[NRO Account]
Who can open an account NRIs (individuals/ entities of
Bangladesh/ Pakistan
nationality / ownership
require prior approval of RBI)
NRIs (individuals/ entities of
Bangladesh/Pakistan
nationality / ownership
require prior approval of RBI)
Any person resident outside
India (other than a person
resident in Nepal and
Bhutan). Individuals / entities
of Pakistan nationality /
ownership, entities of
Bangladesh2ownership
require prior approval of the
Reserve Bank.
Operations by Power of
Attorney in favour of a
resident by the non-resident
account holder
Restricted to withdrawals for
permissible local payments
or remittance to the account
holder himself through
normal banking channels.
Restricted to withdrawals for
permissible local payments
or remittance to the account
holder himself through
normal banking channels.
Operations in the account in
terms of Power of Attorney is
restricted to withdrawals for
permissible local payments in
rupees, remittance of current
income to the account holder
outside India or remittance
COMPARISON

13. Particulars Foreign Currency (Non-
Resident) Account (Banks)
Scheme [FCNR (B) Account]
Non-Resident (External)
Rupee Account Scheme
[NRE Account]
Non-Resident Ordinary
Rupee Account Scheme
[NRO Account]
Joint account In the names of two or more
non-resident individuals
provided all the account
holders are persons of Indian
nationality or origin;
Resident close relative
(relative as defined in Section
6 of the Companies Act,
1956) on ‘former or survivor’
basis.
In the names of two or more
non-resident individuals
provided all the account
holders are persons of Indian
nationality or origin;
Resident close relative
(relative as defined in Section
6 of the Companies Act,
1956) on ‘former or survivor’
basis.
Joint account
Nomination Permitted Permitted Permitted
COMPARISON

14. Rate of Interest
NRE
•Interest rates offered by banks on NRE deposits cannot be higher than those offered by them on
comparable domestic rupee deposits.
FCNR
•deposits of 1 year to less than 3 year maturity, interest shall be paid within the ceiling rate of LIBOR plus 200
basis points;
•deposits of 3-5 years maturity, interest shall be paid within the ceiling rate of LIBOR plus 300 basis points
NRO
•Banks are free to determine their interest rates on savings deposits under Ordinary Non-Resident (NRO)
Accounts. However, interest rates offered by banks on NRO deposits cannot be higher than those offered by
them on comparable domestic rupee deposits.

15. LOAN AGAINST THE DEPOSIT

16. LOAN AGAINST DEPOSIT IN NRE A/C
loan
In India
In INR
To the account
Holder
permitted
To third party Permitted
In Foreign
Currency
To the account
holder
Permitted
To third party Permitted
Outside India
To the account
holder
Permitted
To third party Permitted

17. LOAN AGAINST DEPOSIT IN FCNR(B)
loan
In India
In INR
To the account
Holder permitted
To third party Permitted
In Foreign
Currency
To the account
holder Permitted
To third party Permitted
Outside India
To the account
holder Permitted
To third party Permitted

18. LOAN AGAINST DEPOSIT IN NRO A/C
loan
In India
In INR
To the account Holder
Permitted
subject to
extant Rules
To third party
Permitted
subject to
conditions
In Foreign Currency
To the account holder Not Permitted
To third party Not Permitted
Outside India
To the account holder Not permitted
To third party Not Permitted

19. •i) Personal purposes or for carrying on business activities*
•ii) Direct investment in India on non-repatriation basis by way of contribution to the capital of
Indian firms / companies
•iii) Acquisition of flat / house in India for his own residential use.
To the
Account
holder
•Fund based and / or non-fund based facilities for personal purposes or for carrying on business
activities *.
To
Third
Party
•Fund based and / or non-fund based facilities for bonafide purposes.Abroad
*The loans cannot be utilised for the purpose of on-lending or for carrying on agriculture or plantation
activities or for investment in real estate business.
PURPOSE OF LOAN –IN CASE OF NRE A/C
AND FCNR (B) A/C

20. • Personal requirement and / or
business purpose.*
To the account
holder
• Personal requirement and / or
business purpose *
To third party
Resident individual to lend to a Non-resident Indian (NRI)/ Person of Indian Origin (PIO) close relative [means
relative as defined in Section 6 of the Companies Act, 1956] by way of crossed cheque /electronic transfer.
The loan amount should be credited to the NRO a/c of the NRI /PIO. Credit of such loan amount may be
treated as an eligible credit to NRO a/c;
PURPOSE OF LOAN – NRO ACCOUNT
* The loans
cannot be
utilised for the
purpose of on-
lending or for
carrying on
agriculture or
plantation
activities or for
investment in
real estate
business.

21. A Comparison
NRE Account is meant for foreign
exchange earned outside India and
transferred to India
NRO Account are meant to keep the
money earned in India before or after
becoming an NRI

22. Bank Accounts by Residents

23.  Save as otherwise provided in the Act or rules or regulations made
thereunder, no person resident in India shall open or hold or maintain a
Foreign Currency Account:
 Provided that a Foreign Currency Account held or maintained before the
commencement of these Regulations by a person resident in India with
special or general permission of the Reserve Bank, shall be deemed to be
held or maintained under these Regulations
 Provided further that the Reserve Bank, may on an application made to it,
permit a person resident in India to open or hold or maintain a Foreign
Currency Account, subject to such terms and conditions as may be
considered necessary. [RBI Notification No.FEMA 10 /2000-RB dated
3rd May 2000]
REGULATION

24. Type of Accounts

25. All categories of resident
foreign exchange earners
can credit up to 100 per cent of
their foreign exchange earnings
to their EEFC Account with an
Authorised Dealer in India
Funds held in EEFC account can
be utilised for all permissible
current account transactions
and also for approved capital
account transactions
The account is maintained in
the form of a non-interest
bearing current account
EXCHANGE EARNERS FOREIGN
CURRENCY ACCOUNTS

26.  Inward remittance through normal banking channels, other than remittances received on
account of foreign currency loan or investment received from abroad or received for meeting
specific obligations by the account holder;
 Payments received in foreign exchange by a 100 per cent Export Oriented Unit or a unit in
(a) Export Processing Zone or
(b) Software Technology Park or
(c) Electronic Hardware Technology Park for supply of goods to similar such units or to a unit in Domestic Tariff Area;
 Payments received in foreign exchange by a unit in the Domestic Tariff Area for supply of goods
to a unit in the Special Economic Zone (SEZ);
 Payment received by an exporter from an account maintained with an authorised dealer for the
purpose of counter trade.
 Advance remittance received by an exporter towards export of goods or services;
 Professional earnings including directors fees, consultancy fees, lecture fees, honorarium and
similar other earnings received by a professional by rendering services in his individual
capacity;
 Re-credit of unutilised foreign currency earlier withdrawn from the account;
 Amount representing repayment by the account holder's importer customer, of loan/advances
granted, to the exporter holding such account etc.
PERMISSIBLE CREDITS

27.  Payment outside India towards a permissible current account transaction [in
accordance to the provisions of the Foreign Exchange Management (Current Account
Transactions) Rules, 2000]
 Permissible capital account transaction [in accordance to the Foreign Exchange
Management (Permissible Capital Account Transactions) Regulations, 2000].
 Payment in foreign exchange towards cost of goods purchased from a 100 percent
Export Oriented Unit or a Unit in
(a) Export Processing Zone or
(b) Software Technology Park or
(c) Electronic Hardware Technology Park
 Payment of customs duty in accordance with the provisions of the Foreign Trade Policy
of the Central Government for the time being in force.
 Trade related loans/advances, extended by an exporter holding such account to his
importer customer outside India, subject to compliance with the Foreign Exchange
Management (Borrowing and Lending in Foreign Exchange) Regulations, 2000.
Permissible debits

28. Current or Savings or
Term deposit accounts
A person resident in
India
Free from all
restrictions regarding
utilisation of foreign
currency
opened to keep foreign
currency assets which
were held outside India
at the time of return
RESIDENT FOREIGN CURRENCY
ACCOUNT

29. Permissible credits :
The foreign exchange received as:
 pension of any other superannuation or other monetary benefits from the
employer outside India;
 realised on conversion of the assets acquired, held or owned by such
person when he was resident in India or inherited from a person who was
resident in India
 received or acquired as gift or inheritance from a person who was resident
outside India
RFC ACCOUNT

30. Permissible debits to the RFC account
 The funds in RFC account are free from all restrictions regarding
utilization of foreign currency balances including any restriction on
investment outside India.
 Foreign securities can also be acquired from RFC account.
 The restriction of taking prior approval of government or prior
approval of RBI is not applicable to transactions undertaken out of
RFC account *
*However, the prohibited transactions as specified in Rule 3 of the Foreign Exchange Management (Current Account
Transactions) Rules, 2000 cannot be undertaken at all.

31. Regulations 5A of Foreign
Exchange Management
(Foreign Currency Accounts
by a Person Resident in
India) Regulations, 2000
Resident Individual may
open, hold and maintain
Current account
Does not bear any interest
No ceiling on the balances
in the account
RESIDENT FOREIGN CURRENCY
(DOMESTIC) ACCOUNT

32. Permissible Credits
The account can be opened out of foreign exchange acquired in the form of currency notes, Bank
notes and travellers cheques, from any of the sources like:
 payment for services rendered abroad;
 as honorarium, gift, services rendered;
 in settlement of any lawful obligation from any person not resident in India;
 proceeds of export of goods and/or services, royalty, honorarium, etc.;
 gifts received from close relatives (as defined in the Companies Act);
 disinvestment proceeds received by resident on conversion of shares to ADRs/GDRs
 proceeds of life insurance policy claims/maturity/ surrender values settled in foreign currency
from an insurance company in India permitted to undertake life insurance business by the
Insurance Regulatory and Development Authority; may also be credited to this account.
Permissible Debits
• The account may be debited for payments made towards permissible current and capital account
transactions. At the request of account holder, on change of his status of resident to non resident
the balance in his account can be credited to NRE/FCNR (B) account.
RESIDENT FOREIGN CURRENCY
(DOMESTIC) ACCOUNT

33. REMITTANCES

34. REMITTANCES
Non Resident Indian
From the funds in NRE
account
Freely repatriable on
request
Transfer from NRO account
or Current Income subject
to applicable Taxes
From the funds in NRO
account
Under Certificate from CA
Form 15CA/15CB
Remittance limited to USD 1
million per financial year
RESIDENT
In General
As per FEM (Current
Account Transactions)
Rules,2000
Sche III of CA Rules specifies
the limits of remittance
Under Liberalised
remittance scheme
USD 125000* per financial
Year (April – March)
LRS facility is in addition to
the limits specified in Sche
III of CA Rules
Foreign National
From the funds in NRO
account
Retiring from
employment/inheritance
Remittance limited to USD 1
million per financial year
*Increased from USD 75,000 w.e.f 3 June 2014

35. Taxpert Professionals Private Limited – Mumbai | New Delhi| Kolkata | Bangalore| Bhubaneswar
THANK YOU
Please feel free to call/mail us for further clarification.
Contact:
Taxpert Professionals Private Limited
Tel: +91 9769134554
E-mail us: info@taxpertpro.com
Visit us at: www.taxpertpro.com