Non Resident Indians (NRIs) and Persons of Indian Origin (PIOs)
can open and maintain NRE accounts
with authorized dealers and
with banks (including co-operative banks) authorized by the Reserve
Bank of India (RBI) to maintain such accounts.
The account has to be opened by the Non Resident account holder
himself and not by the holder of the power of attorney in India.
Opening NRE accounts in the names of individuals/entities of
Bangladesh/Pakistan nationality/ownership requires approval of
Types of Accounts - Savings, Current, Recurring
or Fixed Deposit accounts.
Debits & Credits:
Payments for local expenses and investments are allowed freely.
Credits to an account, of funds emanating from a local source
would be permissible only if the funds are of a repatriable nature.
Proceeds of remittances to India can
be in any permitted currency.
- 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 including
instruments expressed in Indian rupees for which reimbursement
will be received in foreign currency, deposited by the account
holder in person during his temporary visit to India, provided
the authorised dealer/bank is satisfied that the account holder
is still resident outside India, the travellers' cheques/drafts
are standing/endorsed in the name of the account holder and
in the case of travellers' cheques, they were issued outside
- Proceeds of foreign currency/bank notes
tendered by account holder during his temporary visit to India,
(i) the amount was declared on a Currency Declaration Form (CDF),
where applicable, and
(ii) the notes are tendered to the authorised dealer in person
by the account holder himself and the authorised dealer is satisfied
that account holder is a person resident outside India.
Transfers from other NRE/FCNR Accounts
Interest accruing on the funds held
in the account.
Interest on Government securities and
dividend on units of mutual funds, provided the securities/units
were purchased by debit to the account holder's NRE/FCNR account
or out of inward remittance through normal banking channels.
Maturity proceeds of Government securities
including National Plan/Savings Certificate as well as proceeds
of Government securities and units of mutual funds sold on a
recognised stock exchange in India and sale proceeds of units
received from mutual funds, provided the securities/units were
originally purchased by debit to the account holder's NRE/FCNR
account or out of remittances received from outside India in
free foreign exchange.
Refund of share/debenture subscriptions
to new issues of Indian companies or portion thereof, if the
amount of subscription was paid from the same account or from
other NRE/FCNR account of the account holder or by remittance
from outside India through normal banking channels.
Refund of application/earnest money
made by the house building agencies on account of non-allotment
of flat/plot, together with interest, if any (net of income-tax
payable thereon), provided the original payment was made out
of NRE/FCNR account of the account holder or remittance from
outside India through normal banking channels and the authorised
dealer is satisfied about the genuineness of the transaction.
- Any other credit if covered under general or special permission granted by Reserve Bank.
- Local disbursements
- Remittances outside India
- Transfer to NRE/FCNR accounts of the account holder or any other person eligible to maintain such
- Investment in shares/securities/commercial paper of an Indian company or for purchase of immovable property in India within prescribed regulations.
- Any other transaction if covered under general or special permission granted by the Reserve Bank.
Rate of Interest - as per the directives of the Reserve
Bank of India.
Loans against Security of Funds held in the Account
To the account holder
i) For personal purposes or for carrying on business
activities (except agricultural/plantation activities/investment
in real estate business).
ii) For making direct investment in India on non-repatriation
iii) For acquisition of flat/house in India for his own residential
In January 2007, the RBI imposed a restriction on loans against
deposits and securities for NRIs to a maximum of upto Rs. 20 lakh
To third parties
The loan should be utilised for personal purposes or
for carrying on business activities (other than agricultural/plantation
activities/real estate business). The loan should not be utilized
Loans outside India
Authorised dealers may allow their overseas branches/correspondents
to grant fund based and/or non-fund based facilities to Non Resident
depositors against the security of funds held in the NRE accounts
and also agree to remittance of funds from India if necessary,
for liquidation of debts.
Change of Resident Status of Account Holder
NRE Accounts should be re designated as resident account or the
funds held in these accounts may be transferred to the Resident
Foreign Currency (RFC) Accounts (if the account holder is eligible
for maintaining RFC Account) at the option of the account holder
immediately upon the return of the account holder to India (except
where the account holder is on a short visit to India).
Repatriation of funds to Non Resident Nominee
can be permitted by the authorized dealer or bank in the case
of an account holder who is deceased.
Other Features -
- Joint Accounts - in
the names of two or more Non Resident individuals may be opened
provided all the account holders are persons of Indian nationality
or origin. When one of the joint holder become residents, the
authorised dealer may either delete his name or allow the account
to continue as NRE account or redesignate the account as resident
account at the option of the account holders. Opening of these
accounts by a Non Resident jointly with a resident is not permissible.
An Account may be opened in the name
of eligible NRI during his temporary visit to India.
Operation by Power of Attorney
- Resident Power of Attorney holder can operate on the NRE accounts
but only for local payments to be made on behalf of the account
holder. The Power of Attorney (POA) holder cannot credit proceeds
of foreign currency notes/bank notes and travellers cheques
to the NRE accounts.
In cases where the account holder or a bank designated by him
has been granted permission by Reserve Bank to make investments
in India, the POA holder is permitted to operate the account to
facilitate such investments. POA holders cannot, however, make
gifts from NRE accounts.
Special Series of Cheques -
Temporary Overdrawing - permitted from
NRE Savings Bank account up to Rs. 50,000 for a period not exceeding
Remittances abroad by Resident nominee
- application for meeting the liabilities if any of the deceased
account holder or similar other purposes, should be forwarded
to RBI for consideration.
- Tax Exemption - Interest income exempted
from income tax, balances held are also exempt from wealth tax.
- Reporting - Transactions to be reported to the Reserve Bank of India.