Q1. Who is an NRI?
Answer: A ‘Non-resident Indian’ (NRI) is a person resident outside India who is a citizen of India.
Q2. Who is a PIO?
Answer: 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:
- Who was a citizen of India by virtue of the Constitution of India or the Citizenship Act, 1955 (57 of 1955); or
- Who belonged to a territory that became part of India after the 15th day of August, 1947; or
- 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
- 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.
Q3. What are the major accounts that can be opened in India by a non-resident?
Non-Resident (External) Rupee Account Scheme
|Foreign Currency (Non-Resident) Account (Banks) Scheme [FCNR (B) Account]||Non-Resident Ordinary Rupee Account Scheme [NRO Account]|
|Who can open an account||
NRIs and PIOs
Individual/entities of Pakistan and Bangladesh shall requires prior approval of the Reserve Bank of India
|Any person resident outside India for putting through bonafide transactions in rupees.
Individuals/ entities of Pakistan nationality/ origin and entities of Bangladesh origin require the prior approval of the Reserve Bank of India.
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.
May be held jointly in the names of two or more NRIs/ PIOs.
NRIs/ PIOs can hold jointly with a resident relative on ‘former or survivor’ basis (relative as defined in Companies Act, 2013). The resident relative can operate the account as a Power of Attorney holder during the life time of the NRI/ PIO account holder.
|May be held jointly in the names of two or more NRIs/ PIOs.
May be held jointly with residents on ‘former or survivor’ basis.
|Any permitted currency i.e. a foreign currency which is freely convertible||Indian Rupees|
|Type of Account||
Savings, Current, Recurring, Fixed Deposit
|Term Deposit only||Savings, Current, Recurring, Fixed Deposit|
|Period for fixed deposits||
From one to three years, However, banks are allowed to accept NRE deposits above three years from their Asset-Liability point of view
|For terms not less than 1 year and not more than 5 years||As applicable to resident accounts.|
Credits permitted to this account are inward remittance from outside India, interest accruing on the account, interest on investment, transfer from other NRE/ FCNR(B) accounts, maturity proceeds of investments (if such investments were made from this account or through inward remittance).
Current income like rent, dividend, pension, interest etc. will be construed as a permissible credit to the NRE account.
Care: Only those credits which have not lost repatriable character
|Inward remittances from outside India, legitimate dues in India and transfers from other NRO accounts are permissible credits to NRO account.
Rupee gift/ loan made by a resident to a NRI/ PIO relative within the limits prescribed under the Liberalised Remittance Scheme may be credited to the latter’s NRO account.
Permissible debits are local disbursements, remittance outside India, transfer to other NRE/ FCNR(B) accounts and investments in India.
|The account can be debited for the purpose of local payments, transfers to other NRO accounts or remittance of current income abroad.
Apart from these, balances in the NRO account cannot be repatriated abroad except by NRIs and PIOs up to USD 1 million, subject to conditions specified in Foreign Exchange Management (Remittance of Assets) Regulations, 2016.
Funds can be transferred to NRE account within this USD 1 Million facility.
|Not repatriable except for all current income.
Balances in an NRO account of NRIs/ PIOs are remittable up to USD 1 (one) million per financial year (April-March) along with their other eligible assets.
Income earned in the accounts is exempt from income tax and balances exempt from wealth tax
|Loans in India||
AD can sanction loans in India to the account holder/ third parties without any limit, subject to usual margin requirements. These loans cannot be repatriated outside India and can be used in India only for the purposes specified in the regulations.
In case of loans sanctioned to a third party, there should be no direct or indirect foreign exchange consideration for the non-resident depositor agreeing to pledge his deposits to enable the resident individual/ firm/ company to obtain such facilities.
In case of the loan sanctioned to the account holder, it can be repaid either by adjusting the deposits or through inward remittances from outside India through banking channels or out of balances held in the NRO account of the account holder.
The facility for premature withdrawal of deposits will not be available where loans against such deposits are availed of.
The term “loan” shall include all types of fund based/ non-fund based facilities.
|Loans against the deposits can be granted in India to the account holder or third party subject to usual norms and margin requirement. The loan amount cannot be used for relending, carrying on agricultural/ plantation activities or investment in real estate.
The term “loan” shall include all types of fund based/ non-fund based facilities.
|Loans outside India||
Authorised Dealers may allow their branches/ correspondents outside India to grant loans to or in favour of non-resident depositor or to third parties at the request of depositor for bona fide purpose against the security of funds held in the NRE/ FCNR (B) accounts in India, subject to usual margin requirements.
The term “loan” shall include all types of fund based/ non-fund based facilities
|Rate of Interest||
As per guidelines issued by the Department of Banking Regulations
|Operations by Power of Attorney in favour of a resident||
Operations in the account in terms of Power of Attorney is restricted to withdrawals for permissible local payments or remittance to the account holder himself through normal banking channels.
|Operations in the account in terms of Power of Attorney is restricted to withdrawals for permissible local payments in rupees, remittance of current income to the account holder outside India or remittance to the account holder himself through normal banking channels. While making remittances, the limits and conditions of repatriability will apply.|
|Change in residential status from Non-resident to resident||NRE accounts should be designated as resident accounts or the funds held in these accounts may be transferred to the RFC accounts, at the option of the account holder, immediately upon the return of the account holder to India for taking up employment or on change in the residential status.||
On change in residential status, FCNR (B) deposits may be allowed to continue till maturity at the contracted rate of interest, if so desired by the account holder.
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.
|NRO accounts may be designated as resident accounts on the return of the account holder to India for any purpose indicating his intention to stay in India for an uncertain period.
Likewise, when a resident Indian becomes a person resident outside India, his existing resident account should be designated as NRO account.
Q4. Can a Bangladeshi/ Pakistani national or an entity owned/ controlled from Bangladesh/ Pakistan have an account in India?
Answer: Opening of accounts by individuals/ entities of Pakistan nationality/ ownership and entities of Bangladesh ownership requires prior approval of the Reserve Bank.
However, individuals of Bangladesh nationality can open an NRO account subject to the individual(s) holding a valid visa and valid residential permit issued by Foreigner Registration Office (FRO)/ Foreigner Regional Registration Office (FRRO) concerned.
Q5. What are the accounts that a tourist visiting India can open?
Answer: An NRO (current/ savings) account can be opened by a foreign national of non-Indian origin visiting India, with funds remitted from outside India through banking channel or by sale of foreign exchange brought by him to India. The balance in the NRO account may be paid to the account holder at the time of his departure from India provided the account has been maintained for a period not exceeding six months and the account has not been credited with any local funds, other than interest accrued thereon.
Q6. What is an SNRR account? How is it different from a NRO account?
Answer: 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 which are in conformity with the provisions of the Act, rules and regulations made thereunder. The features of the SNRR account are:
- The SNRR account will carry the nomenclature of the specific business for which it is opened and not earn any interest.
- The debits/ credits and the balances in the account should be incidental and commensurate with the business operations of the account holder.
- Authorised Dealers are required to ensure that all the operations in the SNRR account are in accordance with the provisions of the Act, rules and regulations made thereunder.
- 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.
- 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.
- The balances in the SNRR account can be repatriated outside India.
- Transfers from any NRO account to the SNRR account are not permitted.
- All transactions in the SNRR account will be subject to payment of applicable taxes in India.
- SNRR account may be designated as resident rupee account on the account holder becoming a resident.
- The amount due/ payable to non-resident nominee from the account of a deceased account holder, will be credited to NRO account of the nominee with an authorised dealer/ authorised bank in India.
- Opening of SNRR accounts by Pakistan and Bangladesh nationals and entities incorporated in Pakistan and Bangladesh requires prior approval of Reserve Bank.
The SNRR can be held only as a non-interest earning account, while an NRO account can earn interest. While the balances in a NRO account are non-repatriable (except for current income and to the extent permissible for NRIs/ PIOs under FEMA 13(R)), SNRR is a repatriable account.
Q 7. What are the deposits that foreign Diplomatic missions/ personnel and their family members in India can hold?
Answer: The following accounts are permitted:
- Foreign diplomatic missions and diplomatic personnel and their family members in India may open rupee deposits with an AD Bank.
- Diplomatic missions and diplomatic personnel can open special rupee accounts namely Diplomatic Bond Stores Account to facilitate purchases of bonded stocks from firms and companies who have been granted special facilities by customs authorities for import of stores into bond, subject to conditions. The funds in the account may be repatriated outside India without the approval of Reserve Bank.
- Diplomatic missions, diplomatic personnel and non-diplomatic staff, who are the nationals of the concerned foreign countries and hold official passport of foreign embassies in India can open foreign currency accounts in India. The account may be held in the form of current or term deposit account, and in the case of diplomatic personnel and non-diplomatic staff, may also be held in the form of savings account Such accounts can be credited by way of inward remittances and transfers (which are collected in India as visa fees) from the rupee account of the diplomatic mission in India. Funds held in such account if converted in rupees shall not be converted back into foreign currency. The funds in the account may be repatriated outside India without the approval of Reserve Bank.
Q8. Can persons resident in Nepal and Bhutan have accounts in India?
Answer: Persons resident in Nepal and Bhutan can open Indian rupee accounts with an authorised dealer in India.
Q9. Can multilateral organisation have deposits in India?
Answer: Any multilateral organization, of which India is a member nation, or its subsidiary/ affiliate bodies and officials in India can open deposits with an authorised dealer in India.
Q10. Can an Indian company accept deposits from non-residents in compliance with section 160 of the Companies Act, 2013?
Answer: Yes, such acceptance of deposit and refunds, if required, will be covered under current account transactions and can be made freely without any restriction from FEMA perspective.
Q11. Can a resident continue to hold immovable property outside India which was acquired by him when he was a non-resident?
Answer: According to section 6(4) of the FEMA, a person resident in India can hold, own, transfer or invest in any immovable property situated outside India if such property was acquired, held or owned by him/ her when he/ she was resident outside India or inherited from a person resident outside India.
Q12. Can a resident individual send remittances and purchase property outside India?
Answer: A resident individual can send remittances under the Liberalised Remittance Scheme (LRS) for purchasing immovable property outside India. In case members of a family pool their remittances to purchase a property, then the said property should be in the name of all the members who make the remittances.
Q13. To whom do the restrictions of transferring property outside India not apply?
Answer: The prohibition of a resident acquiring property outside India is not applicable if:
(a) The resident is a foreign national; or
(b) The property was acquired before July 8, 1947 and continued to be held after obtaining permission; or
(c) If it is acquired on a lease not exceeding five years
Q14. How can immovable property be acquired outside India by a resident?
Answer: Immovable property can be acquired outside India:
- Under section 6(4) of FEMA.
- As an inheritance/ gift from a person (i) referred to in sec 6(4) of FEMA; or (ii) who has acquired it prior to July 8, 1947 (iii) who has acquired such property in accordance with the foreign exchange provisions in force at the time of such acquisition.
- Purchased with balances in the Resident Foreign Currency (RFC) account of the resident.
- As a gift from persons at (b) & (c) above, provided he is a relative of such persons.
- Purchased with remittances made under the Liberalised Remittance Scheme (LRS).
- Jointly with a relative provided there are no outflow of funds from India.
- By an Indian company having overseas offices, for housing its business or for residence of staff.
Q15. How can Non-resident Indians (NRIs)i/ Persons of Indian Origin (PIOs)ii acquire immovable property in India?
|Purchase (other than agricultural land/ farmhouse/ plantation etc) from||Resident/ NRI||Resident/ NRI|
|Acquire as gift (other than agricultural land/ farmhouse/ plantation etc) from||Resident / NRI/ PIO||Resident/ NRI/ PIO|
|Acquire (any IP) as inheritance from||
(a) Any person who has acquired it under laws in force
|Sell (other than agricultural land/ farmhouse/ plantation etc) to||Resident / NRI/ PIO||Resident|
|Sell (agricultural land) to||Resident||Resident who is a citizen of India|
|Gift (other than agricultural land) to||Resident / NRI/ PIO||Resident / NRI/ PIO|
|Gift (agricultural land) to||Resident||Resident who is a citizen of India|
|Gift residential/ commercial property to||Resident / NRI/ PIO||Resident / NRI/ PIO|
Q16. What are the accepted modes of payment for property acquired in India?
Answer: Payment for immovable property has to be received in India and is subject to payment of all taxes and other duties/ levies in India. The payment should be received in the form of funds remitted to India through banking channels or through funds held in NRE/ FCNR(B)/ NRO accounts of the NRIs/ PIOs. Payments should not be made through travellers’ cheque and foreign currency notes. NRIs/ PIOs can avail of housing loan in Rupees from an Authorized Dealer or housing finance Institution in India subject to conditions.
Q17. Can Foreign Embassies/ Diplomats/ Consulate Generals acquire property in India?
Answer: Foreign Embassy/ Diplomat/ Consulate General, can purchase/ sell immovable property (other than agricultural land/ plantation property/ farm house) in India provided –
- Clearance from the Government of India, Ministry of External Affairs is obtained for such purchase/sale, and
- The consideration for acquisition of immovable property in India is paid out of funds remitted from abroad through the normal banking channels.
Q18. Can foreign nationals acquire property in India?
- Citizens of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal, Bhutan, Macau or Hong Kong, irrespective of their residential status, cannot, without prior permission of the Reserve Bank, acquire or transfer immovable property in India, other than on lease, not exceeding five years.
- Foreign nationals of non-Indian origin resident in India (except 10 countries listed at (a) above) can acquire immovable property in India.
- Foreign nationals of non-Indian origin resident outside India can acquire/ transfer immovable property in India, on lease not exceeding five years and can acquire immovable property in India by way of inheritance from a resident. All other acquisitions/ transfers will require the prior permission of RBI
Q19. Can a non-resident repatriate the sale proceeds of immovable property in India?
Answer: A person who has acquired the property U/s 6(5) of FEMA or his successor cannot repatriate the sale proceeds of such property without RBI approval. However, repatriation up to USD I million per financial year is allowed, along with other assets under (Foreign Exchange Management (Remittance of Assets) Regulations, 2016) for NRIs/ PIOs and a foreign citizen (except Nepal/ Bhutan/ PIO) who has (a) inherited from a person referred to in section 6(5) of FEMA, or (b) retired from employment in India or(c) is a non-resident widow/ widower and has inherited assets from her/ his deceased spouse who was an Indian national resident in India.
NRIs/ PIOs can remit the sale proceeds of immovable property (other than agricultural land/ farm house/ plantation property) in India subject to the following conditions:
- The immovable property was acquired in accordance with the provisions of the foreign exchange law in force at the time of acquisition by him or the provisions of Foreign Exchange Management (Acquisition and Transfer of Immovable Property in India) Regulations 2000;
- the amount to be repatriated does not exceed the amount paid for acquisition of the immovable property received through normal banking channels or out of funds held in FCNR(B) account or NRE account;
- in the case of residential property, the repatriation of sale proceeds is restricted to not more than two such properties
Q20. What is the meaning of transfer?
Answer: As per section 2(ze) of FEMA transfer means, sale, purchase, exchange, mortgage, pledge, gift, loan or any other form of transfer of right, title, possession or lien.
i NRI refers to a person resident outside India who is a citizen of India
ii PIO refers to a person resident outside India who is not a citizen of Pakistan/ Bangladesh/ Iran/ Nepal/ Bhutan/ China/ Afghanistan/ Sri Lanka and (a) At any time held an Indian Passport or (b) Who or either father or mother or grandfather or grandmother was a citizen of India (either through the Constitution or Citizenship Act)
iii Section 6(5) of FEMA states that a person resident outside India may hold, own, transfer or invest in any immovable property situated in India if such property was acquired, held or owned by such person when he was resident in India or inherited from a person who was resident in India.
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Q21. Who is a person resident in India?
Answer: Sec 2(v) of the Foreign Exchange Management Act, 1999 (FEMA) defines a person resident in India as:
(i) a person residing in India for more than one hundred and eighty-two days during the course of the preceding financial year but does not include-
(A) a person who has gone out of India or who stays outside India, in either case-
- for or on taking up employment outside India, or
- for carrying on outside India a business or vocation outside India, or
- for any other purpose, in such circumstances as would indicate his intention to stay outside India for an uncertain period;
(B) a person who has come to or stays in India, in either case, otherwise than-
- for or on taking up employment in India, or
- for carrying on in India a business or vocation in India, or
- for any other purpose, in such circumstances as would indicate his intention to stay in India for an uncertain period;
(ii) any person or body corporate registered or incorporated in India,
(iii) an office, branch or agency in India owned or controlled by a person resident outside India,
(iv) an office, branch or agency outside India owned or controlled by a person resident in India;
Q22. What is a foreign currency account?
Answer: A Foreign Currency Account is an account held or maintained in currency other than the currency of India or Nepal or Bhutan.
Q23. What are the major foreign currency accounts that can be opened in India by a resident individual?
Answer: Some of the foreign currency accounts that can be opened by resident individuals with an Authorised Dealer bank in India, along with their features are given below:
|Particulars||Exchange Earners Foreign Currency (EEFC) Account||Resident Foreign Currency (Domestic) [RFC(D)] Account||Resident Foreign Currency (RFC) Account|
|Who can open the account||Exchange Earners||Individuals||Individuals|
|Joint account||Jointly with eligible persons;
With resident relative(s) on former or survivor’ basis.
Relative as defined under Companies Act, 2013 (viz. members of HUF, spouse, parents, step-parents, son, step-son, daughter-in-law, daughter, son-in-law, brother/sister, step-brother/ step-sister)
Relative joint account holder cannot operate the account during the life time of the account holder
|Jointly with any person eligible to open the||Same as EEFC|
|Type of Account||Current only||Current only||Current/ savings/ term deposits|
|Interest||Non-interest earning||Non-interest earning||De-regulated (As decided by the AD bank)|
|Permitted Credits||1) 100% of foreign exchange received on account of export transactions.
2) advance remittance received by an exporter towards export of goods or services
3) Repayment of loans given to foreign importers
4) Disinvestment proceeds on conversion of ADR/ GDR
5) professional earnings like director’s/ consultancy/ lecture fees, honorarium and similar other earnings received by a professional by rendering services in his individual capacity
6) Interest earned on the funds held in the account
7) Re-credit of unutilised foreign currency earlier withdrawn from the account
8) Payments received in foreign exchange by an Indian startup arising out of sales/ export made by the startup or its overseas subsidiaries
|1) Foreign exchange received as payment/ service/ gift/ honorarium while on visit abroad or from a non-resident who is on a visit to India
2) Unspent amount of foreign exchange acquired from AD for travel abroad
3) Gift from close relative
4) Earning through export of goods/ services, royalty
5) Disinvestment proceed on conversion of shares into ADR/ GDR
6) foreign exchange received as earnings of LIC claims/ maturity/ surrendered value settled in forex from an Indian insurance company
|1) Foreign exchange received by him as superannuation/ other monetary benefits from overseas employer
2) Foreign exchange realised on conversion of the assets referred to in Sec 6(4) of FEMA
3) Gift/ inheritance received from a person referred to in Sec 6(4) of FEMA
4) Foreign exchange acquired before the July 8, 1947 or any income arising on it held outside India with RBI permission
6) Foreign exchange received as earnings of LIC claims/ maturity/ surrendered value settled in forex from an Indian insurance company
7) Balances in NRE/ FCNR (B) accounts on change in residential status
|Permitted Debits||1) Any permissible current or capital account transaction
2) Cost of goods purchased
3) Customs duty
4) Trade related loans and advances
|Can be used for any permissible current/ capital account transactions.||No restrictions on utilisation in/ outside India.|
Q24. In what form can a foreign currency account in India be opened?
Answer: Unless otherwise specifically stated in the features of the account, a foreign currency account maintained by a person resident in India with an authorized dealer in India can be opened, held and maintained in the form of current or savings or term deposit account in cases where the account holder is an individual, and in the form of current account or term deposit account in all other cases. The account can be held singly or jointly in the name of person eligible to open, hold and maintain such account.
Q25. When can a resident individual open a foreign currency account outside India?
Answer: A resident individual can open a foreign currency account with a bank outside India in the following cases:
1) A resident student who has gone abroad for studies for the period of stay abroad. All credits to the account from India should be made in accordance with FEMA and the rules and regulations made thereunder. On the student’s return to India after completion of studies, the account will be deemed to have been opened under the Liberalised Remittance Scheme (LRS).
2) A resident who is on a visit to a foreign country for the period of stay abroad. The balance in the account should be repatriated to India on return of the account holder to India.
3) A person going abroad to participate in an exhibition/ trade fair for crediting the sale proceeds of goods. The balance should be repatriated to India within one month from the date of closure of the exhibition/ trade fair.
4) The following persons for remitting/ receiving their entire salary payable to them in India:
- A foreign citizen resident in India, who is an employee of a foreign company and is on deputation to the office/ branch/ subsidiary/ joint venture/ group company in India;
- An Indian citizen who is an employee of a foreign company and is on deputation to the office/ branch/ subsidiary/ joint venture/ group company in India; and
- A foreign citizen who is a resident in India and is employed with an Indian company.
5) For the purpose of sending remittances under the Liberalized Remittance Scheme.
Q26. Can a resident continue to maintain an account outside India which was opened by him when he was a non-resident?
Answer: A person resident in India may maintain a foreign currency account outside India if he had opened it when he was resident outside India or inherited it from a person resident outside India.
Q27. What is the status of the account held outside India on the demise of the account holder?
Answer: A resident nominee of an account held outside India has to close the account and bring back the proceeds to India through banking channels