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Non-Resident Ordinary Rupee (NRO) Account

  • Any person or entity residing outside India is entitled to open a NRO account with an authorised dealer or an authorised bank for transactions conducted in Indian Rupees.
  • Individuals or entities of Bangladeshi or Pakistani nationality or ownership require approval from the RBI.

Types of Accounts
NRO accounts can be opened as current, savings, recurring or fixed deposit accounts. The RBI determines the rate of interest on these accounts and issues guidelines for opening, operating and maintaining them.

Joint Accounts with Residents/Non-residents
Joint accounts are permitted with resident and non-residents.

Permissible Credits/Debits -

Credits -

  • Remittances from outside India through normal banking channels received in freely convertible foreign currency.
  • Any freely convertible foreign currency can be deposited into the account during the account holder's visit to India. Foreign currency exceeding USD 5000/- or its equivalent in the form of cash has to be supported by a Currency Declaration Form. Rupee funds must be supported by an Encashment Certificate, if they are funds brought from outside India.
  • Current income earned in India, such as rent, dividend, pension or interest. Even proceeds from sale of assets including immovable property acquired out of rupee or foreign currency funds or through inheritance.

Debits -

  • All payments towards expenses and investments in India
  • Payment outside India of current income like rent, dividend, pension, interest etc. in India of the account holder.
  • Repatriation up to USD One million, per calendar year, for all bonafide purposes with the approval of the authorised dealer.

Remittance of Assets -
NRIs and PIO may remit upto USD One million per calendar year, out of balances held in the NRO account which could be acquired from the sale proceeds of assets acquired in India out of rupee or foreign currency funds or by way of inheritance from a resident Indian, provided:

(a) Assets acquired in India out of rupee/foreign currency funds
(i) Immovable property: NRIs and PIO may remit sale proceeds of immovable property purchased by them when they were resident or out of Rupee funds as NRI or PIO.
(ii) Other financial assets: There is no lock-in period for remittance of sale proceeds of other financial assets

(b) Assets acquired by way of inheritance: Sale proceeds of assets acquired through inheritance can be remitted. No lock-in period applies here if the authorised dealer is satisfied that the proceeds are from inherited property.

Remittance of assets out of NRO account by a person resident outside India other than NRI/PIO
A foreign national who is not a citizen of Pakistan, Bangladesh, Nepal or Bhutan and who

  • has retired as an employee in India,
  • has inherited assets from a resident Indian, or
  • is a widow residing outside India and has inherited assets of her deceased husband who was a resident Indian can remit upto USD one million per calendar year on production of documentary evidence to support the acquisition by way of inheritance or legacy of assets to the authorised dealer.
Restrictions -
The above facility of repatriation from sale of immovable property is not extended to citizens of Pakistan, Bangladesh, Sri Lanka, China, Afghanistan, Iran, Nepal and Bhutan. Remittance of sale proceeds from other financial assets is not extended to citizens of Pakistan, Bangladesh, Nepal and Bhutan.

Foreign Nationals of non-Indian origin on a visit to India
Foreign nationals of non-Indian origin are permitted to open a NRO account (current/savings) on their visit to India with funds remitted from outside India through normal banking channels or by foreign exchange brought to India. The balance in the NRO account is converted by the bank into foreign currency for payment to the account holder when he leaves India, provided the account was maintained for less than six months. The account should not be credited with any local funds during the term, except for interest accrued on it.

Grant of Loans/ Overdrafts by Authorised Dealers/ Bank to Account Holders and Third parties -
Loans to NRI account holders and to third parties is granted in Indian Rupees by authorised dealers (banks) against the security of fixed deposits provided:

  • The loans are utilised only for meeting the borrower's personal requirements or for business and not for agricultural/plantation /real estate or relending activities
  • RBI regulations pertaining to margin and rate of interest will apply
  • All norms and considerations which apply to loans to trade and industry will apply to loans and facilities granted to third parties.

The authorised dealer/bank may allow an overdraft to the account holder subject to his commercial discretion and compliance with the interest rate directives.

Change of Resident Status of Account holder -
(a) From Resident to Non-resident
When a resident Indian leaves India for taking up employment or for carrying on business outside India, his existing account is designated as a Non-Resident (Ordinary) Account, except in the case of persons shifting to Bhutan and Nepal. For the latter, the resident accounts do not change to NRO accounts.

(b) From Non-Resident to Resident
NRO accounts may be re-designated as resident rupee accounts once the account holder returns to India for taking up employment, or for carrying on business or for any other purpose indicating his objective to stay in India for an uncertain period. Where the account holder is only on a temporary visit to India, the account continues to be treated as non-resident during the visit.

Treatment of Loans/ Overdrafts in the Event of Change in the Resident Status of the Borrower -
In case of a resident Indian who had availed of loan or overdraft facilities while resident in India and who subsequently becomes a NRI, the authorised dealer may at its discretion allow the loan facility to continue. In this case, payment of interest and repayment of loan may be made by inward remittance or out of bonafide resources in India.

Payment of funds to Non-resident/Resident Nominee
The amount payable to a non-resident nominee from the NRO account of a deceased account holder is credited to the NRO account of the nominee.

Facilities to a person going abroad for studies -
Students going abroad for studies are treated as Non-Resident Indians (NRIs) and are eligible for all the facilities enjoyed by NRIs. All loans availed of by them as residents in India will continue to be extended as per FEMA regulations.

International Credit Cards

Authorised dealers are allowed to issue International Credit Cards to NRIs and PIO, without the permission of the RBI. Such transactions can be made by inward remittance or out of balances held in the cardholder's FCNR/NRE/NRO Accounts.

Income Tax
The remittances, after payment of tax are allowed to be made by the authorised dealers on production of a statement 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

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