All About Bank Accounts For NRI’s {FCNR,NRO,NRE Accounts }

Lesson 11 of 13 • 18 upvotes • 9:10mins

Vikas Kumar Singh Tomar

NRO, NE(E)RA and FCNA(A) Accounts There are several kinds of accounts available for non resident Indians , Persons of Indian Origin and Overseas Citizens of India. They are as follows: Non Resident Ordinary Accounts: (NRO): Any person resident outside of India can open this account. Normally, when a resident becomes a non resident, his domestic rupee account gets converted into the NRO account. This helps the NRI to get his credits which accrue in India, for example rent or interest from investments. Non-Resident (External) Rupee Account: (NR(E)RA This account was introduced as NRE scheme in 1970. It’s a Rupee account and the NRI can remit money to India from the funds abroad. This means that depositor is exposed to the Currency rates risk. Foreign Currency Non-Resident Account: (FCNR) Foreign Currency Non-Resident Account Bank or FCNR (B) was first introduced in 1993. It replaced the existing FCNR (A) scheme. This account is opened by the NRIs in 6 designated currencies as follows: US Dollar (USD) Great Britain Pound (GBP) Euro (EUR) Japanese Yen (JPY) Canadian Dollar (CAD) Australian Dollar (AUD) Please note that FCNR account is opened ONLY in the form of Term Deposits and NOT in the form of Demand Deposits. The term is from 1 year to 5 years. Repatriation of the principal and interest is allowed for repatriation after maturity. Interest is paid on maturity, in the same currency of the deposit. For deposits of tenure up to one year simple interest is paid and for deposits of tenure beyond one year the interest is compounded at half yearly rests. The maturity proceeds inclusive of interest is fully repatriable. The banks may decide the interest rates after approval from RBI and within the limits fixed by RBI. If a person has NRE account and wishes to transfer to FCNR, it is permissible without prior approval of the RBI. Deposit Insurance in India In India, the bank deposits are covered under the insurance scheme provided by DICGC. When a bank covered by DICGC fails, or undergoes liquidation or is merged with another bank; the DICGC pays the amount due to depositors via the officially appointed liquidator in a time bound manner.