Banking Accounts and Schemes available to NRIs & Foreign Nationals

Answer: Individuals or entities of Pakistani nationality or ownership, and entities of Bangladesh ownership, must obtain prior approval from the Reserve Bank of India (RBI) to open a bank account in India.

However, a Bangladeshi national may open an NRO account if the individual holds:

• A valid visa, and

• A valid residential permit issued by the Foreigner Registration Office (FRO) or Foreigner Regional Registration Office (FRRO).

Further, citizens of Bangladesh or Pakistan who belong to minority communities in those countries—namely Hindus, Sikhs, Buddhists, Jains, Parsis, and Christians—and who are residing in India may open one NRO account with an Authorised Dealer (AD) bank.

This is permitted only if the individual has been granted a Long-Term Visa (LTV) or if the application for LTV is under consideration by the Central Government, and subject to prescribed conditions.

3. Can an NRI add a resident sister as a joint holder in NRO, NRE, or FCNR (B) accounts?

Answer: Yes, but with restrictions.

• An NRO account may be held jointly with a resident Indian on a former or survivor basis.

• NRE and FCNR (B) accounts may be held jointly only with resident relatives.

• A resident who is not a relative cannot be a joint holder in NRE or FCNR (B) accounts.

4. Who qualifies as a “relative” for joint holding purposes?

Answer: The term relative includes the following persons:

• Members of a Hindu Undivided Family (HUF)

• Spouse

• Father, including step-father

• Mother, including step-mother

• Son, including step-son

• Son’s wife

• Daughter

• Daughter’s husband

• Brother, including step-brother

• Sister, including step-sister

5. Can two or more NRIs or PIOs jointly hold NRE, NRO, or FCNR (B) accounts?

Answer: Yes. Two or more NRIs or PIOs may jointly hold NRE, NRO, and FCNR (B) accounts in India.

6. Can the NRI’s resident sister operate his bank accounts?

Answer: A resident sister who is a joint holder may operate NRE and FCNR (B) accounts only if she holds a valid Power of Attorney (POA) from the NRI.

The AD bank may allow operations under the POA, subject to the following limits:

• Withdrawals for permitted local payments, including eligible investments, subject to compliance

• Remittance to the NRI account holder himself through normal banking channels

  • In the case of an NRO account, only current income after tax may be remitted

• Payment of gifts to residents on behalf of the NRI is not permitted

• Transfer of funds between NRE, FCNR (B), or NRO accounts is not permitted

7. Can a resident POA holder open an NRE account on behalf of an NRI?

Answer: No. A resident POA holder cannot open an NRE account on behalf of an NRI in India.

8. Can an NRI be a joint holder in a resident Indian’s bank account?

Answer: Yes. An NRI who qualifies as a relative may be added as a joint holder in a resident Indian’s bank account.

The account must be held on an “Either or Survivor” basis and must meet other prescribed conditions.

9. Can NRIs take rupee loans in India against NRE or FCNR (B) deposits?

Answer: Yes. NRIs may take rupee loans in India against NRE or FCNR (B) deposits, without any ceiling, subject to margin requirements.

The loan may be used only for the following purposes:

• Personal use or business activities

• Capital contribution to Indian firms or companies on a non-repatriation basis

• Purchase of a flat or house in India for self-occupation

The loan cannot be used for:

• Relending

• Agricultural or plantation activities

• Investment in real estate business

10. Can a resident third party take a loan against NRE or FCNR (B) deposits?

Answer: Yes. Banks may grant loans to resident individuals, firms, or companies against fixed deposits held in NRE or FCNR (B) accounts.

The loan must meet the following conditions:

• The funds must be used for personal or business purposes

• The loan cannot be used for relending, agriculture, plantation, or real estate business

• There must be no foreign exchange consideration, direct or indirect, for the NRI providing the security

• Normal banking norms applicable to trade and industry advances must be followed

11. Can NRIs take loans outside India against NRE or FCNR (B) deposits?

Answer: Yes. NRIs may obtain loans outside India from overseas branches or correspondent banks against NRE or FCNR (B) deposits.

The loan may be taken for personal use or for a third party outside India, provided the funds are used for genuine purposes.

12. Can NRIs take rupee loans in India against NRO deposits?

Answer: Yes. Under FEMA regulations, banks may grant loans against NRO fixed deposits to:

• The NRI account holder, or

• A resident individual, firm, or company

The loan may be used for personal or business purposes, except for relending, agriculture, plantation, or real estate business.

13. Can NRIs take loans outside India against NRO deposits?

Answer: No. Loans outside India against funds held in an NRO account are not permitted.

14. Can an NRI overdraw an NRE account?

Answer: AD banks may allow temporary overdrafts in an NRE account up to ₹50,000, at their discretion.

The overdraft, along with interest, must be cleared within two weeks using:

• Inward remittances through banking channels, or

• Transfer from another NRE or FCNR (B) account

15. Can funds be remitted after the death of an NRI account holder?

Answer: Yes. Funds held in the account of a deceased NRI may be remitted to an NRI nominee.

If a resident nominee requests remittance of funds outside India to meet liabilities of the deceased or for similar purposes, prior RBI approval is required.

18. What qualifies as “business interest” for opening an SNRR account?

Answer: Business interest includes all genuine commercial activities carried out in India. It also covers the following transactions, as specified by the RBI under applicable rules and regulations:

• Foreign investment in India and other permitted investments

• Import and export of goods and services

• Trade credit transactions and lending under External Commercial Borrowings (ECB)

• Business-related transactions undertaken by IFSC units at GIFT City

19. What are the conditions and permitted transactions for an SNRR account?

Answer: An SNRR account may be opened subject to the following conditions:

• Any person resident outside India with a business interest in India may open an SNRR account to carry out bona fide rupee transactions

  • Opening of SNRR accounts by Pakistani or Bangladeshi nationals, or entities incorporated in Pakistan or Bangladesh, requires prior RBI approval

• The SNRR account must clearly state the specific business purpose for which it is opened

  • Account balances must match the scale of business operations

• The account must not result in the account holder providing foreign exchange to a resident in return for rupee reimbursement

• Credits and debits must relate only to the approved business activity and are subject to applicable taxes

• Transfers from an NRO account to an SNRR account are not allowed

• The account tenure must match the contract period or duration of business activity

  • In all cases, the tenure cannot exceed seven years from the date of opening, unless RBI approval is obtained

  • The seven-year limit does not apply to SNRR accounts opened for purposes listed in FAQ 18

• All transactions must be reported to RBI as per prescribed guidelines

20. Can AD banks allow multiple SNRR accounts for the same customer?

Answer: Yes, An AD bank may open separate SNRR accounts for different categories of transactions when the account holder engages in multiple business activities.

The bank must be able to clearly identify, segregate, and account for transactions category-wise.

21. Can foreign tourists open a bank account in India?

Answer: Yes, Foreign tourists of non-Indian origin visiting India for a short stay may open an NRO account (savings or current) with an AD bank.

Tourists of Bangladeshi or Pakistani nationality must meet additional approval and visa requirements, as explained in FAQ 22.

Such accounts may be maintained for a maximum period of six months.

22. Can individuals or entities from Pakistan or Bangladesh open bank accounts in India?

Answer: Individuals or entities of Pakistani nationality or ownership, and entities of Bangladesh ownership, require prior RBI approval to open bank accounts in India.

However: Bangladeshi nationals may open an NRO account if they hold:

• • A valid visa, and  A valid residential permit issued by the FRO or FRRO

• Citizens of Bangladesh or Pakistan belonging to minority communities—Hindus, Sikhs, Buddhists, Jains, Parsis, and Christians—residing in India may open one NRO account, if:

  • They hold a Long-Term Visa (LTV), or

  • Their LTV application is under consideration

This is subject to prescribed conditions.

23. What credits are permitted in an NRO account of a foreign tourist?

Answer: Only the following amounts may be credited to the NRO account of a foreign tourist:

• Funds remitted from outside India through banking channels

• Proceeds from sale of foreign exchange brought into India

• Interest earned on the NRO account balance

24. Can a foreign tourist use the NRO account for local payments?

Answer: Yes, Foreign tourists may freely use the NRO account to make local payments in India.

25. Can a foreign tourist repatriate the balance in the NRO account on departure?

Answer: Yes, AD banks may convert the remaining balance into foreign currency at the time of departure, provided that:

• The account was maintained for not more than six months, and

• The account was not credited with any local funds other than interest

26. Can foreign nationals residing in India open a resident rupee account?

Answer: Yes, Foreign nationals employed in India and holding a valid visa may open and maintain a resident rupee account in India.

27. Can proceeds from a resident rupee account be remitted abroad after closure?

Answer: Yes, AD banks may remit the balance from a resident rupee account held by a foreign national to the individual’s overseas account, after payment of applicable taxes.

To allow collection of pending dues, banks may permit the account to be re-designated as an NRO account when the foreign national leaves India.

Key conditions:

• Total repatriation must not exceed USD 1 million per financial year

• The account must be closed immediately after all dues are received and repatriated

28. How much foreign exchange can a person bring into India?

Answer: A person entering India may bring foreign exchange without any limit. However, the person must declare the foreign exchange to Customs authorities if:

• Total value exceeds USD 10,000, or

• Foreign currency alone exceeds USD 5,000

The declaration must be made using the Currency Declaration Form (CDF) at the airport on arrival.

29. Can residents of Nepal and Bhutan open bank accounts in India?

Answer: Yes. Persons resident in Nepal or Bhutan may open Indian rupee accounts with an AD bank in India.

30. Are foreign nationals required to pay tax and file returns in India?

Answer: Yes, A foreign national may be required to pay Indian income tax on income earned or received in India, regardless of residential status.

If the income exceeds the basic exemption limit, the individual must file an Income Tax Return (ITR) in India.

TDS on income of foreign nationals is usually deducted at the highest applicable rate.
Any excess tax deducted may be claimed as a refund by filing the return.