PiMoney | Deposit Schemes available for Non Resident Indians (NRIs)
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Deposit Schemes available for Non Resident Indians (NRIs)

deposits schemes for nris in india

Deposit Schemes available for Non Resident Indians (NRIs)

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With the Indian Rupee depreciating at the record levels, and interest rates having peaked in India, it is a good time to invest in India. Moreover, the interest rate differential is very high, making Indian markets even more attractive. Lets learn about the different types of deposit options available for NRIs.

NRI deposits are offered under three categories – foreign currency non-resident (banks), or FCNR (B), non-resident ordinary, or NRO, and non-resident external (Rupee Account), or NRE (RA). In case of NRE (RA), the foreign exchange risk is borne by the depositor, and hence tends to gain at the time of conversion when the rupee is appreciating through the tenor of the deposits.

While NRE funds are repatriable, NRO money cannot be remitted abroad. On the other hand, FCNR accounts are denominated in forex and the funds are fully repatriable.

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]

(1)

(2)

(3)

(4)

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 Bangladesh / Pakistan nationality / ownership as well as erstwhile Overseas Corporate Bodies require prior approval of the Reserve Bank.

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. The resident close relative shall be eligible to operate the account as a Power of Attorney holder in accordance with extant instructions during the life time of the NRI/ PIO account holder.

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. The resident close relative shall be eligible to operate the account as a Power of Attorney holder in accordance with extant instructions during the life time of the NRI/ PIO account holder.

May be held jointly with residents

Nomination

Permitted

Permitted

Permitted

Currency in which account is denominated

Any permitted currency i.e.  a foreign currency which is freely convertible

Indian Rupees

Indian Rupees

Repatriablity

Repatriable

Repatriable

Not repatriable except for the following:
i) current income ii) up to USD 1 (one) million per financial year (April-March), for any bonafide purpose, out of the balances in the account, e.g., sale proceeds of assets in India acquired by way of purchase/ inheritance / legacy inclusive of assets acquired out of settlement subject to certain conditions.

Type of Account

Term Deposit only

Savings, Current, Recurring, Fixed Deposit

Savings, Current, Recurring, Fixed Deposit

Period for fixed deposits

For terms not less than 1 year and not more than 5 years.

At the discretion of the bank.

As applicable to resident accounts.

Rate of Interest

 

 

Deposits  of all maturities contracted effective from the close of business in India as on November 23, 2011, interest shall be paid within the ceiling rate of LIBOR/SWAP rates plus 125 basis points for the respective currency / corresponding maturities (as against LIBOR / SWAP rates plus 100 basis points effective from close of business on November 15, 2008).

On floating rate deposits, interest shall be paid within the ceiling of SWAP rates for the respective currency/maturity plus 125 basis points. For floating rate deposits, the interest reset period shall be six months.

Subject to cap as stipulated by the Department of Banking Operations and Development, Reserve Bank of India :

Banks are free to determine the interest rates of saving’s and term deposits of maturity of one year and above.
Interest rates offered by banks on NRE deposits cannot be higher than those offered by them on comparable domestic rupee deposits.

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.

Operations by Power of Attorney in favour of a resident by the non-resident account holder

Operations in the account in terms of Power of Attorney is 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 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 to the account holder himself through normal banking channels.

Remittance is subject to the ceiling of USD 1 (one) million per financial year.

Loansa. In Indiai) to the Account holder

i) to Third Parties

Permitted only up to Rs.100 lakhs

Permitted only up to Rs.100 lakhs

Permitted up to Rs.100 lakhs

Permitted up to Rs.100 lakhs

Permitted subject to the extant rules

Permitted, subject to conditions

b. Abroad
i) to the Account 
holder 
ii) to Third Parties

Permitted
(Provided no funds are remitted back to India and are used abroad only)

Permitted
(Provided no funds are remitted back to India and are used abroad only)

Permitted
(Provided no funds are remitted back to India and are used abroad only)

Permitted
(Provided no funds are remitted back to India and are used abroad only)

Not Permitted

Not Permitted

c. Foreign Currency Loans in India i) to the Account holderii) to Third 
Parties

Permitted up to Rs.100 lakhs

Not Permitted

Not Permitted

Not Permitted

Not Permitted

Not Permitted

Purpose of Loan
a. In India 
i) to the Account holder

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. (Please refer to para 9 of Schedule 2 to FEMA 5).

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. (Please refer to para 6(a) of Schedule1 to FEMA 5).

Personal requirement and / or business purpose.*

ii) to Third Parties

Fund based and / or non-fund based facilities for personal purposes or for carrying on business activities *. (refer to para 9 of Schedule 2 to FEMA 5).

Fund based and / or non-fund based facilities for personal purposes or for carrying on business activities*. (refer to para 6(b) of Sch. 1 to FEMA 5)

Personal requirement and / or business purpose *

b. Abroad 
To the account holder and Third Parties

Fund based and / or non-fund based facilities for bonafide purposes.

Fund based and / or non-fund based facilities for bonafide purposes.

Not permitted.

* 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.

NRI means a person resident outside India who is a citizen of India or is a person of Indian origin [Regulation 2 (vi) of Notification FEMA 5/2000-RB dated May 3, 2000 viz. Foreign Exchange Management (Deposit) Regulations, 2000].

Overseas Corporate Body (OCB) means a company, partnership firm, society and other corporate body owned directly or indirectly to the extent of at least sixty per cent by Non-Resident Indians and includes overseas trust in which not less than sixty percent beneficial interest is held by Non-resident Indians directly or indirectly but irrevocably, which was in existence as on September 16, 2003 and was eligible to undertake transactions pursuant to the general permission granted under Foreign Exchange Management Regulations.

When a person resident in India leaves India for Nepal and Bhutan for taking up employment or for carrying on business or vocation or for any other purpose indicating his intention to stay in Nepal and Bhutan for an uncertain period, his existing account will continue as a resident account. Such account should not be designated as Non-resident (Ordinary) Rupee Account.

Authorised Dealers (ADs) may open and maintain NRE / FCNR (B) Accounts of persons resident in Nepal and Bhutan who are citizens of India or of Indian origin, provided the funds for opening these accounts are remitted in free foreign exchange. Interest earned in NRE / FCNR (B) accounts can be remitted only in Indian rupees to NRIs and PIO resident in Nepal and Bhutan.

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