Banking

NRIs/PIOs/OCBs/ are permitted to open bank accounts in India out of funds remitted from abroad, foreign exchange brought in from abroad or out of funds legitimately due to them in India, with authorized dealer.

Such accounts can be opened with banks specially authorized by the Reserve Bank Of India.

Five types of NRI accounts
In order to simplify the procedures and to provide greater freedom to NRIs/PIOs for putting through financial transactions in India, NRIs and PIOs are now permitted to open bank accounts in India, which will be at par with rupee accounts, maintained by residents.

1. Non-Resident (External) Rupee Accounts (NRE Accounts)
   NRIs, PIOs, OCBs are eligible to open NRE Accounts. These are rupee denominated accounts. Accounts can be in the form of savings, current, recurring or fixed deposit accounts. Accounts can be opened by remittance of funds in free foreign exchange. Foreign exchange brought in legally, repatriable incomes of the account holder, etc. can be credited to the account. Joint operation with other NRIs/PIOs is permitted. Power of attorney can be granted to residents for operation of accounts.
   
   Interest lying to the credit of NRE accounts is exempt from tax in the hands of the NRI.
   
   Funds held in NRE accounts may be freely transferred to FCNR accounts of the same account holder. Likewise, funds held in FCNR accounts may be transferred to NRE accounts of the same account holders.
   
   
2. Ordinary Non-Resident Rupee Accounts (NRO Accounts)
   These are Rupee denominated non-reportable accounts and can be in the form of savings, current recurring or fixed deposits. These accounts can be opened jointly with residents in India. When an Indian National/PIO resident in India leaves for taking up employment, etc. outside the country, his bank account in India gets designated as NRO account.
   
   The deposits can be used to make all legitimate payments in rupees. Interest income, from NRO accounts is taxable.
   
3. Non-resident (Non-reportable) Rupee Deposit Accounts (NRNR Accounts)
   NRIs/PIOs/OCBs, other non-resident Individuals/entities are permitted to open these accounts. Accounts can be opened by transfer of freely convertible foreign currency funds from abroad, or from NRE/FCNR accounts. Deposits can be held jointly with a resident. Deposits can be for a period from 6 months to 3 years, and can be renewed further. Accounts may also be opened by transfer of funds from the existing NRE/FCNR accounts of the non-resident accounts holders.
   
   Interest can be repatriated. There is no income tax on the interest.
   
4. FCNR account Foreign Currency (Non –Resident) Accounts (Banks) (FCNR (B) Accounts)
   
   NRIs/PIOs/OCBs are permitted to open such accounts in US Dollars, Sterling Pounds, Deutsche Marks, Japanese Yen and Euro. The account may be opened only in the form of term deposit for any of the three maturity periods viz; (a) one year and above but less than two years (ii) two years and above but leas than three years and (iii) three years only.
   
   Interest income is tax free in the hands of NRI until he maintains a non-resident status.
   
   FCNR (B) accounts can also be utilised for local disbursements including payment for exports from India, repatriation of funds abroad and for making investments in India, as per foreign investment guidelines.
   
5. Non-Resident (Special) Rupee Accounts with banks in India

Returning Indians
Those Indians, who were non-residents earlier, and are returning now for permanent stay, are permitted to open, hold and maintain with an authorised dealer in India

• A Resident Foreign Currency (RFC) Account to keep their foreign currency assets. Assets held outside India at the time of return can be credited to such accounts. The foreign exchange received or acquired as gift or inheritance may also be credited to this account.
• The funds in RFC account are free from all restrictions regarding utilisation of foreign currency balances including any restriction on investment outside India.