2. Types of Accounts
NRO accounts may be opened / maintained
in the form of current, savings, recurring or fixed deposit accounts. Rate of
interest applicable to these accounts and guidelines for opening, operating
and maintenance of such accounts shall be in accordance with directives/instructions
issued by Reserve Bank (DBOD) from time to time.
3. Joint Accounts with Residents/Non-residents
The accounts may be held jointly
with residents and / or with non-residents.
4. Permissible Credits/Debits
A. Credits
- Proceeds of remittances from outside India through
normal banking channels received in foreign currency which is freely convertible.
- Any foreign currency which is freely convertible
tendered by the account-holder during his temporary visit to India. Foreign
currency exceeding USD 5000/- or its equivalent in form of cash should be
supported by Currency Declaration Form. Rupee funds should be supported by
Encashment Certificate, if they represent funds brought from outside India.
- Transfers from rupee accounts of non-resident
banks.
- Legitimate dues in India of the account holder.
This includes current income like rent, dividend, pension, interest etc. as
also sale proceeds of assets including immovable property acquired out of
rupee/foreign currency funds or by way of legacy/inheritance.
B. Debits
- All local payments in rupees including payments
for investments in India subject to compliance with the relevant regulations
made by the Reserve Bank.
- Remittance outside India of current income like
rent, dividend, pension, interest etc. in India of the account holder.
- Remittance up to USD One million, per calendar
year, out of in the NRO account of NRI/PIO for all bonafide purposes to the
satisfaction of the authorised dealer bank.
5. Remittance of assets
5.1 Remittance of assets by NRI/PIO
NRIs/PIO may remit through an Authorised
Dealer bank, an amount not exceeding USD One million per calendar year, out
of balances held in the NRO account representing the sale proceeds of assets
(a) acquired in India out of rupee/foreign currency funds or (b) by way of inheritance/legacy
or settlement (settlement is also a mode of inheritance from the parent, the
only difference being that the property under the settlement passes to the beneficiary
on the death of the owner/parent without any legal procedures/hassles and helps
in avoiding delay and inconvenience in applying for probate, etc.) from a person
who was resident in India subject to conditions outlined below :
(a) Assets acquired in India out
of rupee/foreign currency funds
(i) Immovable property
NRI/PIO may remit sale proceeds
of immovable property purchased by him as a resident or out of Rupee funds as
NRI/PIO provided such a property was held by him for a period of not less than
ten years. If such a property is sold after being held for less than ten years,
remittance can be made, if the sale proceeds were held for the balance period
in NRO account (Savings/Term Deposit) or in any other eligible investment to
the satisfaction of the authorised dealer bank.
(ii) Other financial assets
For remittance of sale proceeds
of financial assets there is no lock-in-period.
(b) Assets acquired by way of inheritance/legacy
or settlement
For remittance of sale proceeds
of assets, both financial and immovable property acquired by way of inheritance/legacy
or settlement from a person who was resident in India there is no lock-in-period.
NRI/PIO may submit to the satisfaction of Authorised Dealer bank documentary
evidence in support of inheritance/legacy or settlement.
5.2 Remittance of sale proceeds
assets through NRO account by a person resident outside India other than NRI/PIO
A citizen of a foreign state not
being a citizen of Pakistan, Bangladesh, Nepal or Bhutan who
(i) has retired from an employment
in India, or
(ii) has inherited assets from
a person who was resident in India, or
(iii) is a widow resident outside
India and has inherited assets of her deceased husband who was an Indian citizen
resident in India.
may remit an amount up to USD One
million, per calendar year, on production of documentary evidence in support
of acquisition, inheritance or legacy of assets to the authorised dealer bank.
5.3 Restrictions
(a) The facility of remittance
of sale proceeds of immovable property is not available to a citizen of Pakistan,
Bangladesh, Sri Lanka, China, Afghanistan, Iran, Nepal and Bhutan (b) The facility
of remittance of sale proceeds of other financial assets is not available to
a citizen of Pakistan, Bangladesh, Nepal and Bhutan.
6. Foreign Nationals of non-Indian origin on a
visit to India
NRO account (current/savings) 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 converted by
the authorized dealer / bank into foreign currency for payment 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.
7. Grant of Loans/overdrafts by authorised dealer
/ bank to account holders and third parties
(a) Loans to non-resident account
holders and to third parties may be granted in Rupees by authorised dealer /
bank against the security of fixed deposits subject to the following terms and
conditions:
(i) The loans shall be utilised
only for meeting borrower's personal requirements and/or business purpose and
not for carrying on agricultural/plantation activities or real estate
business or for re-lending.
(ii) Regulations relating to margin
and rate of interest as stipulated by Reserve Bank from time to time shall be
complied with.
(iii) The usual norms and considerations
as applicable in the case of advances to trade/industry shall be applicable
for such loans/facilities granted to third parties.
(b) Authorised dealer / bank may
permit overdraft in the account of the account holder subject to his commercial
judgement and compliance with the interest rate etc. directives.
8. Change of Resident Status of Account holder
(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.
When a person resident in India
leaves for Nepal or Bhutan for taking up employment or for carrying on business
or vocation or for any other purposes indicating his intention to stay in Nepal
or Bhutan for an uncertain period, his existing account will continue as a resident
account. Such account should not be designated as Non-Resident (Ordinary)
Account (NRO).
(b) From Non-Resident to Resident
NRO accounts may be re-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.
9. Treatment of loans/overdrafts in the event of
change in the resident status of the borrower
In case of person who had availed
of loan or overdraft facilities while resident in India and who subsequently
becomes a person resident outside India, the authorised dealer / bank may at
their discretion and commercial judgement allow continuance of the loan/overdraft
facilities. In such cases, payment of interest and repayment of loan may be
made by inward remittance or out of legitimate resources in India of the person
concerned.
10. Payment of funds to Non-resident/Resident Nominee
The amount due/payable to non-resident
nominee from the NRO account of a deceased account holder shall be credited
to NRO account of the nominee with an authorised dealer / bank in India. The
amount payable to resident nominee from the NRO account of a deceased account
holder shall be credited to resident account of the nominee with a bank in India.
11. Facilities to a person going abroad for studies
Persons going abroad for studies
are treated as Non-Resident Indians (NRIs) and are eligible for all the facilities
available to NRIs. Educational and other loans availed of by them as residents
in India will continue to be available as per FEMA regulations.
12. International Credit Cards
Authorised dealer banks have been
permitted to issue International Credit Cards to NRIs/PIO, without prior approval
of RBI. Such transactions may be settled by inward remittance or out of balances
held in the cardholder's FCNR/NRE/NRO Accounts.
13. Income-Tax
The remittances (net of applicable
taxes) will be allowed to be made by the authorised dealer banks on production
of an undertaking by the remitter and a Certificate from a Chartered Accountant
in the formats prescribed by the Central Board of Direct Taxes, Ministry of
Finance, Government of India in their Circular No. 10/2002 dated October 9,
2002 [cf. A.P. (DIR Series) Circular No. 56 dated November 26, 2002].