Types of Foreign Accounts in India
Non-Resident Ordinary Rupee Account (NRO Account):
- Tourists from abroad during their short visit to India are entitled to open a Non-Resident (Ordinary) Rupee (NRO) account with any authorised Dealer bank dealing in foreign exchange.
- Such an account can be opened for a maximum period of six months. Tourists can easily make local payments through the NRO account.
- All payments to residents more than an amount of 50,000 can be made only through cheques or pay orders or demand drafts.
- NRO accounts may be opened or maintained in the form of current, savings, recurring or fixed deposit accounts.
- Interest rates offered by banks on NRO deposits cannot be higher than those offered by them on comparable domestic rupee deposits. Account should be denominated in Indian Rupees.
- Non resident Indians or any person of Indian origin may remit from the balances held in NRO account containing an amount which shall not exceed 1 million dollars every financial year, subject to payment of applicable taxes.
- The limit of 1 million dollars every financial year includes sale proceeds of immovable properties held by NRIs and PIOs.
Non-Resident (External) Rupee Account (NRE Account):
- NRE account may be in the form of savings, current, recurring or fixed deposit accounts. The account will be maintained in Indian Rupees.
- Accrued interest income and balances held in NRE accounts are exempt from Income tax.
- Authorized banks may allow for a period of equal to or less than 2 weeks the overdrawing in savings accounts NRE up to a limit of fifty thousand.
- Loans can be allowed till hundred lakh rupees against the security of funds held in NRE Account either to the depositors or third parties.
Foreign Currency Non-Resident Account (FCNR Account):
- FCNR accounts mainly are of term deposits which range from one to five years. The account can be in any convertible currency.
- Loans can be allowed till hundred lakh rupees against the security of funds which are present in the FCNR deposit to the depositors or third parties.
- The interest rates are regulated by the DBOD (Department of Banking Operations and Development), RBI.
- EEFC (Exchange Earners’ Foreign Currency Account) is an account maintained in foreign currency with an Authorized Dealer which may be a bank dealing in foreign exchange.
- It is a facility provided to the foreign exchange earners, including exporters, to credit 100 % of their foreign exchange earnings to the account.
- Thus they would not have to convert foreign exchange into Rupees and vice versa which in turn will minimise the transaction costs.
- All categories of foreign exchange earners, such as individuals, companies, etc. who are resident in India, may open EEFC accounts.
- Such an account can be held only in the form of a current account on which interest is payable.
Other posts you might be interested in: