NON RESIDENT ORDINARY ACCOUNTS(NRO)

NON-RESIDENT(EXTERNAL) RUPEE ACCOUNTS(NRE)

NRI BANKING

*To meet the specific needs of non-resident Indians related to their remittances, savings, earnings, investments and repatriation, the Government of India introduced in 1970 Non-

Resident (External) Account Rules which are governed by the Exchange Control Regulations.

*The Foreign Exchange Management Act, 1999 determines the laws regulating foreign exchange and enlists the various deposit schemes available

to Non-Resident Indians.

MEANING OF NRI ACCOUNTS

*NRI accounts are maintained by banks which hold authorized dealers' licenses from the Reserve Bank of India.

*All NRIs can open such accounts, with the exception of individuals residing in Pakistan and Bangladesh, who require special permission from the RBI. Joint accounts of two or more non-residents and nomination facility are permitted.

*Banks are offering lucrative interest rates to bols-ter NRI funds.

MEANING OF NON RESIDENT INDIAN (NRI)

UNDER I.T ACT An Indian Citizen who stays abroad for employment/carrying on

business outside India or stays abroad under circumstances indicating an intention for an uncertain duration of stay abroad is a non-resident.

EXAMPLE: Persons posted in U.N. Organizations and Officials deputed abroad by Central/State Governments and Public Sector undertakings on temporary assignments are also treated as non-residents.

An individual (whether Indian citizens or not) who is outside India and who comes on a visit to India in any previous year will be treated as "non-resident" in India if he stays in India in that previous year less than 182 days subject to the condition that during the preceding four previous years his stay in India does not amount to 365 days or more.

CLASSIFICATION OF

NRI ACCOUNT

S

Rupee accounts

1) Non Resident Ordinary Account

(NRO)2)Non resident (external) Rupee account (NRO)

Foreign currency accounts

1)Foreign Currency Non Resident

Account (Banks)( FCNR(B))2)Resident Foreign Currency

(RFC) Account Scheme3)Exchange Earners’

Foreign Currency Account (EEFC)

MEANINGNON RESIDENT

ORDINARY ACCOUNTS (NRO)

Non-resident ordinary accounts can be opened either by money received from abroad in foreign exchange or out of rupees earned in India. When an Indian resident goes abroad for job / employment his local account will automatically be designated into a non resident ordinary account by bank.

For this the bank should be informed of his / her departure outside India for job. This account can be maintained jointly with residents. Funds held in the account can normally be utilized only in India.

NON-RESIDENT (EXTERNAL)

RUPEE ACCOUNTS (NRE)

These are again rupee accounts. The NRE account can be opened only with money received from abroad and not from local rupee sources. There can be joint holder to the account but not with residents. The joint account holder should also be a non resident.

The funds held in the account can be freely repatriated outside India without limit and without any approval from RBI. Since the account is maintained in rupee, for repatriation purpose the Rupee will be converted into the desired foreign currency at the prevailing rate of ex change.

FEATURES OF:-Basis NRE Account NRO Account

1}Who can open this account

Any NRI can open NRE a/c with funds remitted to India through a

bank abroad.(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 OCBs require prior approval of RBI).

2}Joint Holding NRE account can be jointly held with another NRI but not with resident Indian.

NRO account can be held with NRI as well as resident Indian (close relative)

as defined under Section 6 of the Companies Act 1956.

3}Currency In Which Account Is Denominated

Indian Rupees Indian Rupees

4}Nomination Permitted Permitted

FEATURES CONTI…Basis NRE Account NRO Account

5}Repartiability NRE account is freely repatriable (Principal and interest earned)

Principal of NRO deposits are non-repatriable, current income like interest earnings are repatriable. While NRI/POI may remit an

amount, not exceeding US$1million per F.Y., for permissible transactions from these

accounts. 6}Type of account Savings, Current, Recurring, Fixed Deposit Savings, Current, Recurring, Fixed Deposit

7}Tax Treatment NRE account is Tax free (no Income tax, wealth tax and gift tax) in India.

On the other hand the interest earned in NRO account and credit balances are subject to respective income tax bracket and are also subject to applicable wealth and gift tax.

PRIMARY REASONS FOR CHOOSING THESE ACCOUNTS

Choose NRE account if you: want to park your overseas

earnings remitted to India converted to Indian Rupees;

want to maintain savings in Rupee but keep them liquid; want to make a joint account with another NRI;

want Rupee savings to be freely repatriable

Choose NRO account if you: want to park India based

earnings in Rupees in India; want account to deposit

income earned  in India such as rent, dividends etc;

want to open account with resident Indian (close relative).

COMPARISION:

NRE AND NRO SAVINGS ACCOUNTS

PROVIDERAXIS BANK

STANDARD CHARTERED

BANK OF INDIA

BHARAT COOPERATIVE

BANK1}Account

Type1}NRE savings A/C2}NRO Savings A/C

1}NRE savings A/C2}NRO Savings A/C

1}NRE savings A/C2}NRO Savings A/C

1}NRE savings A/C2}NRO Savings A/C

2}Interest Rate

4% 4% 4% 4%

3}Average BalanceAmount

INR 10,000 INR 25,000 INR 5,000 INR 5,000

4}Average Balance Period

Quarterly Quarterly Half Yearly Half Yearly

5}Application By

Post &Branch

Post &Branch

Post &Branch

Branch

6}Joint Account 1}Allowed with other NRI or Residents Indians.

2}Allowed with other NRI/NRI’S & local residents also.

PROVIDER AXIS BANK

STANDARD CHARTERED

BANK OF INDIA

BHARAT COOPERATIVE

BANK6}Taxes 1}Interest earned and balance in NRE exempted from income/wealth tax.

2}Income/wealth taxes is levied @30%+surcharge and concession,if any is subject to double tax avoidance agreement with certain countries.

7}Repatriability 1}Principal+Interest Repatriable. 2}Repatriable upto USD 1 Million per calander year.

9}Denominated Currency Indian Rupee(INR)

10}Type of Accounts

1)Savings A/C2)Current A/C3)Savings A/C for returning POI/NRI/OCI

1}NRE/NRO savings2}NRE/NRO current3}NRE term deposits4}NRE employee banking A/C5}NRI 3-in1 A/C

1}Savings A/C 2}Current A/C3}Term Deposit

1}Savings2}Current3}Fixed Deposit4}Monthly/Quarterly income5}Double benefit deposit6}Recurring Deposit

THANKYOU….!!!

-Shiwani singh