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NON-RESIDENT (ORDINARY) DEPOSIT - NRO

NRI's CORNER - NON-RESIDENT (ORDINARY) DEPOSIT ACCOUNT – NRO

A Non Resident (Ordinary) Account can be opened and maintained by - any person residing outside India being an NRI & also a foreigner i.e. both Bala Chander residing in USA as an NRI as also Bill Clinton residing in USA too as a foreigner can open and operate NRO accounts.

The accounts are not convertible / non repatriable and are maintained in Indian rupees in the form of savings, current and recurring or fixed deposit accounts.

Provisions as regards eligibility, types of accounts, permitted debits / credits, rate of interest, Loans against the security of funds held in NRO account, change of residential status of account holder, repatriation of funds by NRI nominee, and miscellaneous matters such as joint holding, operations by POA etc. are provided herein.

Note: Opening of accounts by individual/entities of Bangladesh/Pakistan nationality requires approval of Reserve Bank of India.

1. Definitions :

.01 "Non Resident Indian [NRI] means an Indian citizen or a foreign citizen of Indian origin (excluding citizens of Bangladesh and Pakistan) residing outside India.
RBI has clarified that students studying abroad also be treated as NRIs under FEMA and thus are eligible for opening NRE/FCNR a/cs as also foreign investments .

.02 "Person of Indian Origin" means an Indian citizen or a foreign citizen other than citizen of Bangladesh and Pakistan who;

i) at any time held an Indian Passport, or

ii) himself or his parents or grand parents were citizens of India , or

iii) is a spouse of an Indian citizen, or

iv) is a spouse of person referred to in (i) or (ii) above.

.03 Overseas Corporate Body[OCB] were eligible to open and maintain NRE account till 3.10.2003..
OCB means a Company, Partnership Firm, Society or body wherein 60 % or more ownership lies with NRIs or a Trust wherein 60 % or more financial interest is irrevocably held by NRIs.

.04 "NRO Account" means a Non-Resident Ordinary account referred to in clause (iii) of sub-regulation (1) of Regulation 5;

FEATURES OF NRO

1.	Eligibility	Any person resident outside India including an NRI who is a citizen of India or a foreign citizen of Indian origin residing outside India as also a foreigner and an Overseas Corporate Bodies (OCBs). Opening of accounts by individual/entities of Bangladesh/Pakistan nationality/ownership requires approval of Reserve Bank.
2	Currency	Indian Rupees.
3	MODE OF DEPOSIT Period	Income from domestic non-repatriable sources or realisations from local investments / sources , transfer from NRE/FCNR accounts ; forex remittance from abroad or deposit of foreign exchange during visit to India 15 days to 120 months
4.	JOINT HOLDING	Permissible with other NRIs as well as Residents. (resident attorney can also operate).
5	INTEREST	Banks can offer at par with resident accounts.
6.	REPATRIABILITY	Interest Repatriable- subject to payment of tax Balance repatriable upto US$ 1 mn per financial year [under US $ one million scheme] Repatriation from NRO to NRE is permissible w. e. f. 07th May 2012.
7	LOANS	Available to account holder as well as third party resident in India
8	NOMINATION	Permissible with NRIs as well as Residents.
9.	TRANSFERS	Permissible in account holder's other NRO accounts or NRE accounts.
10.	VARIOUS TYPES OF ACCOUNTS	Saving, Current, Recurring and Fixed Deposits account.
11	PREMATURE WITHDRAWAL	Permissible: - However for period of less than 15 Days - No interest payable ; above 15 Days - Subject to Penalty - As per Bank Rules.
12	TAXABILITY	Interest income liable to tax Balance not subject to Wealth Tax. No Gift Tax provisions in India . However w.e.f. 1-4-2006 amount received in excess of Rs.50,000 by way of gifts from persons other than specified relatives is included in donee’s income and chargeable to income tax.
13.	TAX DEDUCTION	Banks required to deduct tax at source from interest payable at rate of 20% if initial credit from NRE/ FCNR or forex remittance otherwise 30%.+ surcharge & education cess. NRIs can also claim benefits of Dual Tax Treaty tax rate.
14	RETURNING NRIs	NRO account is to be redesignated as resident account immediately upon return
15.	PERMISSIBLE CREDITS	Income from domestic non-repatriable sources or realizations from local investments / sources Remittances to India in any permitted foreign currency. Personal cheques drawn in foreign currency and/or bank drafts drawn in foreign currency or Indian rupees drawn abroad. Foreign currency / TCs deposited by NRI during visit to India . Import of currency exceeding US$ 5000 and TCs of equal amount require a Currency Declaration Form(CDF). Any other credit if covered under general or special permission granted by Reserve Bank.
16	PERMISSIBLE DEBITS	Local disbursements. Interest fully repatriable subject to tax. Remittances outside India upto and under US$ 1 mn per financial year. Transfer to NRO accounts of the account holder or another NRI. Investment in shares/securities /commercial paper of an Indian company or for purchase of immovable property in India permitted under FEMA on non-repatriation basis. Any other transaction if covered under general or special permission granted by the Reserve Bank.