Foreign Exchange Management (Deposit) Regulations, 2016 do not allow NRI’s to hold the savings bank account in India which means banks are not allowed to accept deposits from the NRI’s in the form of a general savings account. However, Post Offices in India may maintain savings bank accounts in the names of persons resident outside India and allow operations on these accounts subject to the same terms and conditions as are applicable to NRO accounts maintained with an authorised dealer/ authorised bank.
However, NRI’S are allowed to open the following types of accounts with the banks in India-
1. Non-Resident (External) Account Scheme (NRE account), specified in Schedule 1.
2. Foreign Currency (Non-Resident) Account Banks Scheme, (FCNR(B) account), specified in Schedule 2.
3. Non-Resident (Ordinary) Account Scheme, (NRO account), specified in Schedule 3.
4. Any person resident outside India having a business interest in India may open, hold and maintain with an authorised dealer in India, a Special Non-Resident Rupee Account (SNRR account), specified in Schedule 4.
RULE APPLICABLE FOR THE DIFFERENT ACCOUNTS WHEN THERE IS CHANGE OF RESIDENTIAL STATUS OF ACCOUNT HOLDER-
1. NRE ACCOUNT ( Refer to schedule 1)
NRE accounts should be re-designated as resident accounts or the funds held in these accounts may be transferred to the RFC accounts (if the account holder is eligible for maintaining RFC account) at the option of the account holder immediately upon the return of the account holder to India for taking up employment or for carrying on business or vocation or for any other purpose indicating an intention to stay in India for an uncertain period. Where the account holder is only on a short visit to India, the account may continue to be treated as NRE account even during his stay in India.
2. FCNR(B) ACCOUNT (SCHEDULE 2)
When an account holder becomes a person resident in India, deposits may be allowed to continue till maturity at the contracted rate of interest, if so desired by him. However, except the provisions relating to the rate of interest and reserve requirements as applicable to FCNR (B) deposits, for all other purposes such deposits shall be treated as resident deposits from the date of return of the account holder to India. Authorised dealers should convert the FCNR(B) deposits on maturity into resident rupee deposit accounts or RFC account (if the depositor is eligible to open RFC account), at the option of the account holder and interest on the new deposit (rupee account or RFC account) shall be payable at the relevant rates applicable for such deposits.
3. NRO ACCOUNTS (SCHEDULE 3)
(a) From Resident to Non-resident
When a person resident in India leaves India for a country (other than Nepal or Bhutan) for taking up employment, or for carrying on business or vocation outside India or for any other purpose indicating his intention to stay outside India for an uncertain period, his existing account should be designated as a Non-Resident (Ordinary) account.
(b) From Non-resident to Resident
NRO accounts may be designated as resident rupee accounts on the return of the account holder to India for taking up employment, or for carrying on business or vocation or for any other purpose indicating his intention to stay in India for
an uncertain period. Where the account holder is only on a temporary visit to India, the account should continue to be treated as non-resident during such visit.
As per the FEMA regulation whenever there is a change in residential status of the account holder either from NRI to RI or vice versa he has to intimate the change of residential status to the concerned bank and has to convert its bank accounts as per the process mentioned above for the different accounts.