Deposit Account - FAQ

Account Type

What is FCNR (B) A/c ?

It means ‘Foreign Currency NonResident (Bank)’ Account.

Who can open a FCNR (B) a/c ?

The account can be opened in the name of NRI individuals (single/ joint) or with resident Indians on 'former or survivor' basis.

Who is a Nonresident Indian (NRI)/ Persons of Indian origin (PIO) ?

NRI are those Indian residents who are in employment, studying and staying permanently abroad. PIO are foreign nationals (except of Pakistan and Bangladesh), with their origin in India. Students proceeding abroad for higher studies are treated as Nonresidents.

Which type of accounts can be opened under FCNR (B) ?

Only Term Deposit with maturity of minimum 1 year & maximum 5 years.

In which currencies can these a/cs be opened in our Bank ?

Pound Sterling, US Dollar, Euro, Canadian Dollar and Australian Dollar.

These accounts can be opened with which funds ?

These accounts can be opened as per depositor’s choice, in any of the permitted currencies, out of the funds received as foreign inward remittances in convertible currency through normal banking channel. The Foreign Currency Travellers Cheques / Notes may be accepted during temporary visits of the NRI, for credit to account.

Can these accounts be opened jointly with Indian residents ?

Yes, but with their resident close relative (Relative as defined in Section 6 of the Companies Act, 1956) on 'former or survivor' basis.

Whether nomination is permitted in FCNR (B) Account ?

Nomination in favour of NRI/PIO or a resident is allowed in the account.

What are the maturity periods under the scheme ?
  1. 1 year and above but < 2 years.
  2. 2 years and above < 3 years
  3. 3 years and above but <4 years
  4. 4 years and above < 5 years
  5. Five years only.
Whether interest income from FCNR (B) account is taxable under Income Tax ?

No. Interest income from FCNR (B) accounts is exempt from Income Tax.

Whether deposit held under FCNR (B) a/cs is taxable under Wealth Tax ?

No. Deposit held under FCNR (B) a/cs is not taxable under Wealth Tax.

Whether resident Indian holder of Power of Attorney is permitted to operate the account ?

Yes. He can give instructions about operations in the account, but can remit the amount abroad only to the account holder.

Is the addition or deletion of name/s of joint account holders allowed ?

At the request of all the joint holders, Bank may allow the addition or deletion of name/s of joint account holder/s as per rules.

Is the amount held under FCNR deposit repatriable ?

Yes. Funds (Principal & Interest) is fully repatriable in foreign currencies.

Is the proceeds of the account also repatriable to third parties ?

Yes. As per the instruction, subject to Bank being satisfied about such repatriations.

Is transfer of funds from existing FCNR (B)/NRE a/c to FCNR (B) and viceversa permitted without the prior approval of RBI ?

Yes.

What is the manner of payment of interest on FCNR (B) account ?
  1. For deposits up to one year, without any compounding effect
  2. For deposits for over 1 year, compounding at intervals of 180 days each and thereafter for the remaining actual number of days
How the interest is to be paid on term deposit maturing on Sundays / holidays / Nonbusiness working days ?

Bank to pay interest at the originally contracted rate on the deposit amount for abovementioned days, intervening between the due date and the actual date of payment, on the succeeding working day.

Is there any facility for granting Loan / overdrafts against FCNR (B) Deposits to account holder/ third party ?

Yes, for permitted purposes, as per RBI guidelines.

What are the restrictions on advances against FCNR (B) deposits ?

Banks are at present prohibited from granting fresh loans or renewing existing loans to individuals in India in excess of Rupees One crores (Rs.100 Lacs) against FCNR (B) deposits.

How interest is payable on FCNR deposits to NRIs on return to India ?

Banks may allow FCNR (B) deposits NRIs/PIOs, who return to India for permanent settlement, to continue till maturity at the contracted rate of interest, if desired, as per rules.

Is the premature withdrawal of deposits allowed ?

Yes. At the request of the depositor, Bank allows premature withdrawal.

What is NRE A/c ?

It means NonResident (External) Account.

Who can open NRE a/cs ?

The account can be opened in the name of NRI individuals (single/ joint) or with resident Indians on 'former or survivor' basis.

Who is a Nonresident Indian / Persons of Indian origin ?

NRI are those Indian residents who are in employment, studying and staying permanently abroad. PIO are foreign nationals (except of Pakistan and Bangladesh), with their origin in India. Students proceeding abroad for higher studies are treated as Nonresidents.

Which type of accounts can be opened under NRE ?

Saving Fund / Current Account / Recurring Deposit / Term Deposit (with maturity of minimum 1 year & maximum 5 years).

In which currency these a/cs are maintained in the Banks ?

Indian Rupees.

These accounts can be opened with which funds ?
  1. These accounts can be opened in Indian Rupees with / out of the funds received as foreign inward remittances in freely convertible currency through normal banking channel.
  2. The Foreign Currency Travellers Cheques / Notes may be accepted during temporary visits of the NRI, for credit to account.
  3. By transfers from rupee accounts of nonresident banks.
Is transfer of funds from existing NRE/FCNR a/c to NRE a/c and viceversa permitted without the prior approval of RBI ?

Yes.

Can these accounts be opened jointly with Indian residents ?

Yes, but with their resident close relative (Relative as defined in Section 6 of the Companies Act, 1956) on 'former or survivor' basis.

Whether nomination is permitted in NRE Account ?

Nomination in favour of NRI/PIO or a resident is allowed in the account.

What are the maturity periods under the NRETerm Deposit scheme ?
  1. 1 year to < 2 years
  2. 2 years to < 3 years
  3. 3 years.
Whether interest income from NRE a/c is taxable under Income Tax ?

No. Interest income from NRE accounts is exempt under Incometax.

Whether deposit held under NRE a/cs is taxable under Wealth Tax ?

No. Deposit held under NRE a/cs is not taxable under Wealth Tax.

Whether resident Indian holder of Power of Attorney is permitted to operate the a/c ?

Yes. Operations restricted to local disbursements (other than gifts to resident), including for investments subject to compliance of relevant regulations. But remittances / repatriation abroad may be made only to account holder.

Is the addition or deletion of name/s of joint account holders allowed ?

At the request of all the joint holders, Bank may allow the addition or deletion of name/s of joint account holder/s, as per rules.

Is the amount held under NRE deposit repatriable ?

Yes. Funds (both Principal & Interest) is fully repatriable in foreign currencies.

How the interest is to be paid on term deposit maturing on Sundays /holidays / Nonbusiness working days ?

Bank to pay interest at the originally contracted rate on the deposit amount for abovementioned days, intervening between the due date and the actual date of payment, on the succeeding working day.

Is there any facility for granting Loan / overdrafts against NRE Deposits to account holder/ third party ?

Yes, for permitted purposes, as per RBI guidelines.

What are the restrictions on advances against NRE deposits ?

Banks are at present prohibited from granting fresh loans or renewing existing loans to individuals in India in excess of Rupees One crores (Rs.100 Lacs) against NRE deposits

How interest is payable on NRE deposits to NRIs on return to India ?

Banks may allow NRE deposits NRIs/PIOs, who return to India for permanent settlement, to continue till maturity at the contracted rate of interest, if desired, as per rules.

Is the premature withdrawal of deposits allowed ?

Yes. At the request of the depositor, Bank allows premature withdrawal.

What is NRO A/c?

It means Non-Resident (Ordinary) Account.

Who can open NRO a/cs?

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 OCBs require prior approval of RBI.

Which type of accounts can be opened under NRO?

Saving Fund / Current Account / Recurring Deposit / Term Deposit.

In which currency these a/cs are maintained in the Banks?

Indian Rupees.

These accounts can be opened with which funds?
  1. The accounts can also be opened with / out of the funds received as foreign inward remittances in convertible currency through normal banking channel. The Foreign Currency Travellers Cheques / Notes may be accepted during temporary visits of the NRI, for credit to account.
  2. The accounts can also be opened with the Legitimate local dues denominated in Indian Rupees viz. rent / dividend / pension / interest /sale proceeds of assets etc.
What will be the status of accounts existing at the time of change of status from Indian resident to Non-resident Indian?

Such accounts may be designated as Non-resident (Ordinary) Accounts.

Is transfer of funds from FCNR (B) / NRE a/c to NRO a/c permitted?

Yes.

Can these accounts be opened jointly with Indian residents?

Yes.

Whether nomination is permitted in NRO Account?

Nomination is allowed in favour of a resident or Non-resident Indian.

What are the maturity periods under the NRO-Term Deposit scheme?

Similar to maturity periods available under domestic deposit schemes.

What is the Rate of Interest payable on NRO a/cs?

The Interest Rate payable on NRO accounts is same as that is payable under domestic deposit schemes.

Whether tax is deducted at source on the interest paid in NRO a/cs?

Yes, Income tax is deductible at source as per DTAA executed by India with 71 countries.

Whether resident Indian holder of Power of Attorney is permitted to operate the a/c?

Yes. Operations restricted to local disbursements (other than gifts to resident), including for investments subject to compliance of relevant regulations. But remittances / repatriation abroad may be made only to account holder.

Is the addition or deletion of name/s of joint account holders allowed?

At the request of all the joint holders, Bank may allow the addition or deletion of name/s of joint account holder/s, as per rules.

What are the permissible credits and debits in NRO a/c?
  • Permissible Credits
    1. Proceeds of freely convertible currency foreign inward remittances, received through normal banking channels.
    2. The Foreign Currency Travellers Cheques / Notes may be accepted during temporary visits of the NRI.
    3. Transfers from rupee accounts of non-resident banks.
    4. Legitimate dues in India of the account holder. This includes current income like rent, dividend, pension, interest, etc. as also sale proceeds of Assets including immovable property acquired out of rupee/foreign currency funds or by way of legacy/inheritance.
  • Permissible Debits
    1. All local payments in rupees including payments for investments in India subject to compliance with the relevant regulations made by the Reserve Bank.
    2. Remittance outside India of current income like rent, dividend, pension, interest, etc. in India of the account holder.
    3. Remittance up to USD One million, per financial year (April-March), for all bonafide purposes, to the satisfaction of the authorized dealer bank.
Is the amount held under NRO deposit repatriable?

Current income and other remittances upto USD 10,00,000 per financial year for bonafide purposes permitted subject to compliance of guidelines of RBI/CBDT. Remittance (net of applicable taxes) will be allowed on production of an undertaking by the remitter and a certificate from a Chartered Accountant in the formats prescribed by the Central Board of Direct Taxes, Ministry of Finance, Government of India vide their circular no. 10/2002 dated 9th October 2002 and circular no.4/2009 dated 29 June 2009

How the interest is to be paid on term deposit maturing on Sundays /holidays / Non-business working days?

Yes, As per guidelines applicable on domestic deposits.

Is there any facility for granting Loan / overdrafts against NRO Deposits to account holder/ third party?

Yes, for permitted purposes, as per RBI guidelines.

What is the manner of charging interest for advances against NRO deposits?

Please refer to the operative circular on Interest rates on Advances.

How the loans/ overdrafts sanctioned during resident status are to be treated in the event of change of resident status to NRI?

In such cases, payment of interest and repayment of loan, availed when the status was resident Indian, may be made by inward remittance or out of legitimate resources in India of the person concerned, even though the status has changed to NRI.

How the funds are to be paid to nominee of the NRO a/c?
  1. The amount due / payable to non-resident Indian nominee of the NRO account of a deceased account holder shall be credited to NRO account of the nominee.
  2. The amount payable to resident nominee of the NRO account of a deceased account holder shall be credited to resident account of the nominee with a bank in India.
How interest is payable on NRO deposits to NRIs on return to India?

Banks may allow NRO deposits NRIs/PIOs, who return to India for permanent settlement, to continue till maturity at the contracted rate of interest, if desired, as per rules.

Is the premature withdrawal of deposits allowed?

Yes. At the request of the depositor, Bank allows premature withdrawal.

Is any penalty levied on pre-mature withdrawal of NRO deposit?

Yes. As per guidelines applicable on domestic deposits

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