Saturday, April 19, 2008

NRE vs. NRO vs. FCNR vs. NRNR vs. NRSR

Non Resident External Account (NRE)Current / Savings / Term Deposits accounts can be opened under this scheme. Funds can be held by NRIs/PIOs/OCBs in convertible Indian rupees.

Minimum balance required:
1. Current Account : Rs 10,000
2. Savings Account : Rs 5,000
3. Term Deposits : Rs 10,000

Accounts can be opened through the following modes:

  • Remittances in any convertible currencies from abroad, which will be converted at ruling exchange rates into Indian rupees
  • Transfers from existing NRE/FCNR accounts / deposits or
  • Foreign exchange brought into India during visits to India
A joint account can also be opened by two or more individuals, provided all of them are NRIs. In case of an account in the name of a minor, both the minor and the guardian should be NRIs.
Entire balance, including interest earned thereon, can be converted into any convertible currency at ruling exchange rates and repatriated abroad.
Interest on term deposit can be paid periodically or compounded.
Balance in the NRE accounts is exempt from Wealth Tax.
Entire interest income from a NRE account is exempt from Income Tax under the provisions of Income Tax Act in India.
The power of attorney holder in India on behalf of a Non-Resident can not open NRE.
Non Resident Ordinary Account (NRO)Account to be maintained in local currency

  • NRIs who have local income or expenses in India can open NRO Account. The Account can be Savings, Current or Fixed Deposit Account
  • Local incomes like rent, dividend, or interest can be credited to this account
  • Interest earned on this account is not exempt from Income Tax under the provisions of Income Tax Act
  • Interest earned is repatriable subject to RBI guidelines
  • Joint Account with Resident / Non Resident can be opened
Minimum balance required
1. Current Account : Rs 10,000
2. Savings Account : Rs 5,000
3. Term Deposits : Rs 10,000

Non Resident Non Repatriable Deposit Scheme (NRNR)With effect from 1 April 2002

  • No new deposits, whether by way of renewal of existing deposit or otherwise, shall be accepted. Existing deposits may be continued only upto the date of maturity
  • On maturity of the existing deposit, the maturity proceeds can be credited directly to the account holder’s Non Resident (External) Account (NRE) or he can open a fresh NRE Term Deposit Acccount. At the request of the account holder, the maturity proceeds can be credited to his NRO account also
  • The proceeds can be credited directly only to NRE account only on maturity but not to FCNR(B) Account
  • In case of premature withdrawal the proceeds shall be credited only to Non Resident – Ordinary (NRO) Account
Foreign Currency Non Resident Deposit Scheme (FCNR)Account to be maintained in foreign currencies
  • Funds can be held by Non Resident Indian / Persons of Indian Origin / Overseas Corporate Bodies
  • Fixed deposit accounts maintained only in US Dollars, Sterling Pounds, Japanese Yen and Euro
  • The deposits can be accepted for a minimum period of 12 months and upto 36 months. Minimum deposit amount is USD 1,000 or equivalent
  • Deposit can be made by remittances from abroad or by transfer of funds from NRE accounts or by depositing foreign exchange while on visit to India
  • Interest payments would be at half yearly
  • All other benefits available at NRE deposits are also available to FCNR deposit
Non Resident (Special) Rupee Account (NRSR)With effect from 1 April 2002
  • No fresh deposit, whether by way of renewal of existing deposit or otherwise, shall be accepted. Existing deposits may be continued only upto the date of maturity
  • On maturity of the existing deposit, the maturity proceeds shall be credited to the account holder’s Non Resident (Ordinary) Account (NRO)
  • Existing NRSR Account (other than a term deposit) shall not be continued after 30 September 2002 and it may at the option of the account holder, be closed, or the balance therein credited to his NRO account on or before that date.


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