The non-resident should open the Account himself.

1. Power of Attorney holder on behalf of non-resident cannot open the Account.
2. Opening of Account in the name of individuals / entities of Bangladesh / Pakistan nationality / ownership requires RBI approval.

Types of Accounts

Accounts can be:

1. Savings Account ;
2. Current Account;
3. Recurring Deposit (RD) Account; or
4. Fixed Deposit (FD) Account.

Permitted Credits

The following are the credits allowed into the Account:

1. Proceeds of remittances to India in any permitted currency;
2. Proceeds of personal cheques drawn by the account holder on his foreign currency account and of travellers cheques, bank drafts payable in any permitted currency. The traveller's cheques / drafts should be in the name of the account holder or endorsed in his favour;
3. Proceeds of foreign currency notes / bank notes tendered by account holder and the same is declared on a Currency Declaration Form (CDF);
4. Transfer from NRE / FCNR Accounts;
5. Interest accruing on the funds held in the account;
6. Interest on Government securities and dividend on units of mutual funds. The securities / units should be purchased out of funds in NRE / FCNR Account or out of inward remittance of foreign exchange;
7. Maturity / Sale proceeds of the following:

1. Government securities; or
2. Units of Mutual Funds.

8. Refund of subscription monies made to new issues of shares or debentures of Indian Companies. Subscription should have been made out of funds in NRE / FCNR Account or out of inward remittance of foreign exchange;
9. Refund of application / earnest money made by house-building agencies on account of non-allotment of flat / plot. Interest payable by the agency can also be credited if tax has been deducted at source. Application / Earnest money should have been paid out of funds in NRE / FCNR Account or out of inward remittance of foreign exchange; and
10. Any other credit if covered under general or special permission granted by Reserve Bank of India (RBI).

Permitted Debits

1. Local disbursements;
2. Remittances outside India;
3. Transfer to NRE / FCNR Account of the account holder or of any other person eligible to maintain such account;
4. Investment in shares / securities / commercial paper of an Indian Company or for purchase of immovable property in India. The RBI should have permitted the investment / purchase; and
5. Any other debit if covered under general or special permission granted by Reserve Bank of India (RBI).

Rate of Interest

The rates of interest offered by various Banks in India differ.

It is beneficial to ascertain the best of the rates offered by various banks before investing with any particular Bank.

Click Here for Interest Rates offered by various Banks and an analysis of the same.

Loans against balances held in the account

1. Loans are granted to the account holder for:

1. Personal purposes or for carrying on business activities.

Loans cannot be used for:

1. re-lending;
2. carrying on agricultural / plantation activities; or
3. investment in real estate business.

2. Making direct investment on non-repatriation basis by contribution to Capital in Indian Firms / Companies.
3. For acquisition of flat / house in India for the account holder's residential purpose.

2. Loans are also granted to third parties resident in India:

Conditions to be fulfilled:

1. There should be no direct or indirect foreign exchange consideration for the non-resident depositor;
2. Loan should be utilised for personal purposes or for carrying on business activities.

1. re-lending;
2. carrying on agricultural / plantation activities; or
3. investment in real estate business.

3. The account holder for taking loans outside India can also show these deposits as security.

Banks allow temporary overdrawings on the NRE Savings Bank Accounts. The overdrawings have to be repaid within two weeks out of:

1. inward remittances; or
2. by transfer of funds from other NRE / FCNR Account.

Change of Residential status

On immigrating to India:

1. NRE Accounts can be re-designated as resident accounts; or
2. Funds held in NRE Accounts may be transferred to RFC Account.

Nomination / Cancellation

Nomination can be in favour of residents or non-residents.

Funds lying in the NRE Account on the death of an account holder can be repatriated to his non-resident nominee.

For remittance of funds by resident nominee outside India for meeting the liabilities of the deceased account holder or for similar other purposes, RBI approval is required.

Joint Accounts

Two or more non-resident individuals can open Joint Account, provided they are Persons of Indian Nationality or Origin. However, Opening of these accounts by a non-resident jointly with a resident is not permissible.

Operations by Power of Attorney (POA) Holder

POA Holder can make withdrawals from the account only for local payments. The POA Holder is permitted to operate the Account to make investments on behalf of the account holder.

However, the POA Holder is not allowed:

1. to repatriate funds held in the account outside India;
2. to make payment by way of gift to a resident on behalf of the account holder; or
3. to transfer funds from the account to another NRE Account.

Cheque Books

Special series of cheques are issued to the account holders by banks for easy identification and quicker processing.

Tax Liability

Income from interest on balances standing to the credit of NRE Accounts is exempt from Income Tax. Balances held in such accounts are exempt from Wealth Tax.

For any information regarding the Non -Resident (External) Rupee Account Scheme (NRE A/c), please visit the FAQ section