In the continuance of the Types of Account Maintained By Non-Resident (Part-1)
FOREIGN CURRENCY (NON-RESIDENT) ACCOUNT (BANKS) SCHEME [FCNR (B) A/C]:
Q 1. Who can open FCNR (B) A/C?
Ans: 1. Any Non-Resident Indian (NRI) & Person of Indian Origin (PIO) without any approval of the RBI with Authorised Bank.
2. Individuals/Entities of Pakistan and Bangladesh shall require prior approval of the RBI
Q 2. Can NRIs hold the account jointly with someone?
Ans: a. Two or more NRIs/PIOs may held/maintained the account jointly.
- NRIs/PIOs can also hold the account jointly with a Resident Relative (defined as per Companies Act). Power of Attorney granted to the Resident relative for operating the account on the behalf of Accountholder.
Q 3. In which form accounts may be maintained?
Ans: The accounts may be maintained in the form of Term Deposit.
Q 4. Which type of currencies denominated by this account for putting through bonafide transaction?
Ans: Any permitted currency (which is freely convertible).
Q 5. What is the time period of Fixed Deposits?
Ans: Minimum tenure is 1 year
Maximum tenure is is 5 years.
Q 6. What is Permissible Debits?
Ans: Following type of debits which are permitted by RBI are below mentioned:
- Local Disbursements
- Remittance outside India
- Transfer to another NRE/FCNR (B) accounts
- Made investments in India (through shares/securities/commercial paper issued by Indian Company).
Q 7. What is Permissible Credits?
Ans: Following type of credits which are permitted by RBI:
- Inward Remittance from outside India.
- Interest accruing on this account
- Interest on investment made in India
- Transfer from other NRE/FCNR(B) Accounts
- Maturity proceeds of investments (Condition: Such Investment should be made from this account/through inward remittance.)
- Various types of Current Income also permitted:
- Rent
- Dividend
- Pension
- Interest etc.
One should have to take care that credits only in the nature of repatriable character are permitted by the RBI.
Q 8. Whether any exemption granted to the income earned in such account?
Ans: Yes, exemption is granted to those income which has earned in this account from the income tax .
Q 9. Whether any loan facility available to the NR under the NRE A/c?
Ans: Yes, the Authorised Dealer can sanction loans to the account holder without any limit, subject to usual margin requirements.(Loan Facility Available in India)
Condition imposed by the RBI:
- Amount of loans cannot be repatriated outside India.
- Loan Amount can be used only for specified purpose in India.
Q 10. What is the procedure for repayment of loan granted in India ?
Ans: Amount of loan can be repaid in three ways:
- By adjusting the deposits or
- Through inward remittances from outside India through the banking channels or
- Out of the balances held in NRO Account of the account holder.
Q 11. Is there any loan facility available under this account from outside India?
Ans: Yes, loan may be granted outside India by the Authorised Dealers.
At the request of depositor only for bona fide purpose against the security of funds held in the NRE/FCNR (B) Accounts in India.
Q 12. Is third party on the behalf of account holder eligible to take loan in such type of account?
Ans: Yes, AD can sanction loans whether in India or outside India to the Third Party on behalf of the account holder.
Q 13. Can the residential status be changed from the Non-Resident to the Resident?
Ans: Account holder has an option to change his/her status from NR to R on the maturity of the FCNR (B) deposits. AD should convert the FCNR(B) deposits on being mature into the Resident Rupee Deposit A/c or RFC A/c.
NON-RESIDENT ORDINARY RUPEE ACCOUNT SCHEME [NRO A/C]:
Q 1. Who can open NRO A/C?
Ans: a. Any person resident outside India for putting through bonafide transaction in Rupees.
b. Individuals/Entities of Pakistan Nationality shall require prior approval of the RBI.
c. With the prior approval of the RBI, entities of Bangladesh Origin.
Q 2. Can NRIs hold the account jointly with someone?
Ans: a. Two or more NRIs/PIOs may held/maintained the account jointly.
1. NRIs/PIOs may also held the account jointly with Resident
Q 3. Which type of accounts maintained under this?
Ans: The following types of accounts can be maintained under NRO scheme:
1. Savings A/c
2. Current A/c
3. Recurring A/c
4. Fixed Deposit A/c
Q 4. Which currencies are denominated in this account?
Ans: Only INR (Indian Rupees) are denominated.
Q 5. What is the time period of Fixed Deposits?
Ans: The period is same as applicable to the Resident accounts.
Q 6. What is Permissible Debits?
Ans: Following are the type of debits permitted by the RBI:
1. Local Payments
2. Transfer to the other NRO Accounts
3. Remittance of current income abroad
[Current Income: Rent, Dividend received]
Q 7. What is the restriction imposed by the RBI on repatriation?
Ans: Upto USD 1 Million per F.Y. can be repatriated outside India subject to the conditions mentioned in Foreign Exchange Management (Remittance of Assets) Regulations, This facility is available only to the NRIs/PIOs.
Q 8. What is Permissible Credits?
Ans: Types of Permissible Credits:
1. Inward remittances from outside India.
2. Legitimate dues in India.
3. Transfer from other NRO Accounts.
4. Rupee Gift*
5. Loan made by a Resident to NRI/PIO relative*
* Upto the limits prescribed under the “Liberalised Remittance Scheme”.
Q 9. Whether any exemption granted to the income earned in such account?
Ans: All incomes which are earned through this account are taxable. NOT EXEMPTED.
Q 10. Whether any loan facility is available through this A/c?
Ans: The account holder/Third Party is eligible to avail the loan facility which are granted against the deposits only (Subject to usual norms & as per margin requirement)
Q 11. What are the restrictions imposed on utilization of loan amount?
Ans: Restriction imposed by the RBI on utilization of loan amounts:
1. Can’t be used for relending purpose.
2. Can’t be used for carrying Agricultural /plantation activities.
3. Can’t be used for the investment in Real Estate.
Q 12. Is there any loan facility available outside India?
Ans: Not Permitted. (Loan facility is available only in India under the NRO A/c)
Q 13. Is third party on the behalf of account holder eligible to take loan in such type of account?
Ans: Yes, AD can sanction loans whether in India to the Third Party on behalf of the account holder.
Q 14. Can the residential status be changed from the Non-Resident to the Resident?
Ans: Whenever the accountholder returns to India for any purpose indication his/her intention to stay in India for an uncertain period, then status of this account will change from NRO A/c to Resident A/c.
Likewise, when a resident Indian becomes a person resident outside India, his existing resident account should be designated as NRO account.
Apart of the NRO A/c, FCNR (B) A/c, NRE A/c, person resident outside India may open the following types of accounts:
1. Special Non-Resident Rupee Account (SNRR A/c)
2. Escrow A/c
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