Foreign Currency (Non Resident) Account (Banks) scheme – FCNR

(B) Accounts

Non Resident Indians (NRIs) and Persons of Indian Origin (PIOs) are permitted to
open and Maintain these accounts.
Features
 The account can be maintained only in the form of fixed deposits.
 Accepted in foreign currencies, viz. USD/ GBP/ EUR.
 Minimum Amount USD 1000/- , GBP 1000/- , EUR 1000/-.
 Tenure of the deposit: Minimum 1 year to Maximum 5 years.
 Interest payable on maturity or at half yearly interest, as per customer’s
choice.
 Nomination facility available.
 Joint accounts permitted with other NRIs/ PIOs and also with resident
relative (as per section 2 (77) of Companies Act 2013.), but with operational
instructions as “Former or survivor”.
Source of Funds:
 Foreign Inward Remittance through Normal Banking Channel.
 Transfer of funds from existing NRE / FCNR (B) Account.
Benefits:
 Principal along with interest are freely repatriable.
 No exchange risk as the deposit is maintained in foreign currency and the
interest accrued / paid thereon is also in foreign currency.
 Interest earned is exempted from Income tax in India.
 Facility for automatic renewal of deposits on maturity.
 Any inland movement of fund for the purpose of opening FCNR (B)account
as well as for repatriation outside India of balances held in these accounts
will be free of Inland exchange or commission for Non Resident depositors.
NRE and NRO

PIO – Must satisfy the following conditions:

 Who was a citizen of India by virtue of the Constitution of India or the
Citizenship Act 1955 : or
 Who belonged to a territory that became part of India after 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 person referred to in clause (a) or (b) or (c).
(PIO will include an ‘Overseas Citizen of India’ cardholder within the
meaning of Section 7(A) of the Citizenship Act, 1955.)
Features of NRE Accounts:
Particulars Non-Resident (External) Rupee Account Scheme [NRE Account]

(1) (3)

NRIs/ PIOs
Who can open an account
(individuals of Bangladesh / Pakistan nationality/ownership require prior ap

In the names of two or more non-resident individuals provided all the accou
origin;
Joint Account Resident close relative (relative as defined in Section 2(77) of the Companie
resident close relative shall be eligible to operate the account as a Power of
instructions during the life time of the NRI/ PIO account holder.

Nomination Permitted

Currency in which account is denominatedIndian Rupees

Repatriablity Repatriable

Type of Account Savings, Current, Recurring, Fixed Deposit

Period for fixed deposits From one to five years,

With effect from March 1, 2014, interest rates offered by banks on NRE dep
Rate of Interest
on comparable domestic rupee deposits.

Operations by Power of Attorney in favour

Operations in the account in terms of Power of Attorney is restricted to with
of a resident by the non-resident account
remittance to the account holder himself through normal banking channels
holder
LOANS All loan proposals/enquiries from NRIs must be refered to Head Office

a. In India

i) to the Account holder Permitted without any ceiling subject to usual margin requirements

ii) to Third Parties Permitted without any ceiling subject to usual margin requirements.

b. Abroad

i) to the Account
Permitted without any ceiling subject to usual margin requirement
holder

ii) to Third Parties Permitted without any ceiling subject to usual margin requirements.

c. Foreign Currency Loans in India

i) to the Account holder Permitted without any ceiling subject to usual margin requirements.

ii) to Third
Permitted without any ceiling subject to usual margin requirements
Parties

Purpose of Loan

a. In India

i) Personal purposes or for carrying on business activities.*

i) to the Account holder ii) Direct investment in India on non-repatriation basis by way of contributio
iii) Acquisition of flat / house in India for his own residential use. (Please ref

Fund based and / or non-fund based facilities for personal purposes or for c
ii) to Third Parties
6(b) of Sch. 1 to FEMA 5)

b. Abroad
Fund based and / or non-fund based facilities for bonafide purposes.
To the account holder and Third Parties

*The loans cannot be utilised for the purpose of on-lending or for carrying on
agriculture or farm houses or plantation activities or for investment in real estate
business.
 Balances held in the NRE account are freely repatriable.
 Accrued interest income and balances held in NRE accounts are exempt
from Income tax and Wealth tax, respectively.
Permitted Credits and Debits
Permissible credits to NRE account are inward remittance to India in permitted
currency, proceeds of account payee cheques, demand drafts / bankers’ cheques,
issued against encashment of foreign currency, where the instruments issued to the
NRE account holder are supported by encashment certificate issued by AD
Category-I / Category-II, transfers from other NRE / FCNR accounts, sale
proceeds of FDI investments, interest accruing on the funds held in such accounts,
interest on Government securities/dividends on units of mutual funds purchased by
debit to the NRE/FCNR(B) account of the holder, certain types of refunds, etc.
 Eligible debits are local disbursements, transfer to other NRE / FCNR
accounts of person eligible to open such accounts, remittance outside India,
investments in shares / securities/commercial paper of an Indian company,
etc.
*Relative as defined under section 2(77) of Companies Act, 2013
 Members of HUF
 Spouse
 Parents
 Step-parents
 Son
 Step-son
 Daughter-in-law
 Daughter
 Son-in-law
 Brother/sister
 Step-brother/ step-sister.