Who is an NRI?

 A ‘Non-resident Indian’ (NRI) is a person resident outside India who is a citizen of India.

Who is a PIO?

A ‘Person of Indian Origin (PIO)’ is a person resident outside India who is a citizen of any country other than Bangladesh or Pakistan or such other country as may be specified by the Central Government, satisfying the following conditions:

1. Who was a citizen of India by virtue of the Constitution of India or the Citizenship Act, 1955 (57 of 1955); or

2. Who belonged to a territory that became part of India after the 15th day of August, 1947; or

3. Who is a child or a grandchild or a great grandchild of a citizen of India or of a person referred to in clause (a) or (b); or

4. Who is a spouse of foreign origin of a citizen of India or spouse of foreign origin of a person referred to in clause (a) or (b) or (c)

A PIO will include an ‘Overseas Citizen of India’ cardholder within the meaning of Section 7(A) of the Citizenship Act, 1955. Such an OCI Card holder should also be a person resident outside India.

Following 3 major accounts that can be opened in India by a non-resident:

 1. Non-Resident Ordinary Rupee Account (NRO Account)

Ø NRO accounts may be opened / maintained in the form of current, savings, recurring or fixed deposit accounts. Interest rates offered by banks on NRO deposits cannot be higher than those offered by them on comparable domestic rupee deposits.

Ø Account should be denominated in Indian Rupees.

Ø NRI/PIO may remit from the balances held in NRO account an amount not exceeding USD one million per financial year, subject to payment of applicable taxes.

Ø The limit of USD 1 million per financial year includes sale proceeds of immovable properties held by NRIs/PIOs.

2. Non-Resident (External) Rupee Account (NRE Account)

Ø NRE account may be in the form of savings, current, recurring or fixed deposit accounts.

Ø Account will be maintained in Indian Rupees.

Ø Accrued interest income and balances held in NRE accounts are exempt from Income tax.

Ø Authorised dealers/authorised banks may at their discretion allow for a period of not more than two weeks, overdrawings in NRE savings bank accounts, up to a limit of Rs.50,000.

Ø Loans up to Rs.100 lakh can be extended against security of funds held in NRE Account either to the depositors or third parties.

3.   Foreign Currency Non Resident (Bank) Account – FCNR (B) Account

Ø FCNR (B) accounts are only in the form of term deposits of 1 to 5 years

Ø Account can be in any freely convertible currency.

Ø Loans up to Rs.100 lakh can be extended against security of funds held in FCNR (B) deposit either to the depositors or third parties.

Ø The interest rates are stipulated by the Department of Banking Operations and Development, Reserve Bank of India.

Special Non-Resident Rupee Account (SNRR account)

 Any person resident outside India, having a business interest in India, can open a Special Non-Resident Rupee Account (SNRR account) with an authorised dealer for the purpose of putting through bona fide transactions in rupees 

The features of the SNRR account are:

1. The SNRR account will carry the nomenclature of the specific business for which it is opened and not earn any interest.
2. The tenure of the SNRR account should be concurrent to the tenure of the contract/ period of operation/ the business of the account holder and in no case should exceed seven years. No operations are permissible in the account after seven years from the date of opening of the account.
3. The operations in the SNRR account should not result in the account holder making available foreign exchange to any person resident in India against reimbursement in rupees or in any other manner.
4. The balances in the SNRR account can be repatriated outside India.
5. Transfers from any NRO account to the SNRR account are not permitted.
6. All transactions in the SNRR account will be subject to payment of applicable taxes in India.

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