NRI Banking

All about NRI banking, most important points regarding NRI Banking service provided by indian banks like NRE account, NRO account, FCNR account sbi,bank of baroda, hdfc, icici, IOB etc.

  1. NRIs and PIOs have various options to invest their savings in India and earn very attractive interest.
  2. There are 3 types of accounts NRI/PIO can open-NRO, NRE and FCNR B.
  3. NRO and NRE accounts are designated in Indian Rupees and can either be savings or current or term deposit accounts.
  4. NRO accounts are very similar to domestic accounts.
  5. NRI resident in Nepal or Bhutan cannot open NRO account.
  6. NRI resident in Pakistan requires a special permission from Reserve Bank of India.
  7. Cash in Rupees and Local Rupee Cheques (drawn in India) cannot be deposited in the NRE account.
  8. FCNR B account offers the facility of term deposit only, having a minimum period of 1 year and a maximum period of 5 years.
  9. FCNR B Deposit Account is maintained in foreign currency and the interest earned is based on LIBOR.
  10. FCNR B deposits can be accepted in US Dollar (USD), Great Britain Pounds (GBP), Euros (EUR), Austrailian Dollars (AUD), Yen (JPY), Singapore Dollars (SGD) and Canadian Dollars(CAD).
  11. No interest is generally payable by banks under NRE and FCNR (B) Fixed Deposit Accounts, if the account is closed before completion of 1 year.
  12. Pre-mature withdrawal of deposits is allowed with penal interest which usually is 1%.
  13. Automatic renewal facility for NRI deposits is also available with the banks. This facility can be availed by marking suitable indication in the application form while opening the account. Under such auto-renewal facility, deposit will be renewed on the same original terms and conditions and the rate of interest for the renewed period shall be the rate prevailing on the maturity date of the deposit.
  14. NRI can have joint accounts. Joint account holders can be NRIs or resident Indians who are close relatives on a former or Survivor' basis and can operate the account as Power of Attorney Holder (POA).
  15. NRI account also provides a facility of nomination.
  16. Nominees can be NRIs or resident Indians in the NRI accounts.
  17. Balances in the NRE or FCNR(B) accounts are freely repatriable.
  18. Repatriation can be in the currency of account holder's choice.
  19. No wealth tax or income tax is applicable on interest earned on NRE and FCNR (B) deposits.
  20. Loan is given in Indian Rupees in India against Term Deposits for self as well as for third party whether NRI or Resident Indian.
  21. Loan is also granted in foreign currency for its use outside India to the account holder or to the third parties.
  22. Loan / Overdraft against NRE / FCNR/NRO Deposits can be availed of up to 85% to 95% of the deposits for purpose other than investments in India subject to the maximum ceiling as per RBI guidelines.
  23. Rupee Loan against NRO term deposit is allowed as per rules for loan against domestic term deposits.
  24. The loan cannot be used for the purpose of re-lending, carrying on agriculture/plantation activities or for investment in real estate business.
  25. Loan against NRE fixed deposits can be utilized for investment purpose in India on non-repatriation basis and for acquisition of flats/houses in certain specified areas which is subject to prescribed conditions.
  26. Loans availed as above cannot be repatriated and also cannot be credited to NRE/FCNR account. The loan proceeds can however be credited to Non-resident Ordinary (NRO) account, if desired by the account holder.
  27. Repayment of the loan and the payment of interest accrued shall be made either by fresh remittances from abroad or out of maturity proceeds of the borrower's NRE / FCNR fixed deposits against which the loan was granted or from funds held in NRO accounts. In case of repayment from local rupee resources, interest will be at commercial rate of interest.
  28. Deposits against which loans are taken cannot be prematurely withdrawn by the account holder.
  29. The accounts can be credited by remittances from abroad, by tendering foreign currency and or travellers' cheques at the time of one's visit.
  30. Repatriation of current income, sale proceeds of acquired or inherited assets and balances in the account is allowed. Alternatively these can also be transferred to NRE account.
  31. The total limit for repatriation and transfer to NRE account is USD 1 million in a financial year.
  32. Submission of forms 15 C A and 15 C B is mandatory for every repatriation or transfer.
  33. Tax is deductable at 30% + Education Cess + Higher Education Cess. Alternatively, tax is deductable as per DTAA with the NRI country.
  34. Other facilities like Internet banking, free SMS alerts, statement of accounts by Email, Debit/ATM cards (valid in India), Safe Deposit Locker are available.
  35. Other services like Insurance for home, travel insurance, health insurance, personal accident cover are also provided.
  36. Debit and Credit cards also issued to NRIs.
  37. Facilities like investment in Mutual Funds, Shares, Debt instruments, Portfolio Management Services, etc. are also provided by the banks to the NRIs.
  38. All transactions by NRIs in Indian Banks are governed by RBI Rules and Regulations.