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Types of Foreign Accounts in India

Published on Tuesday, March 14, 2017

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 Account

  • 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.

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