NRI Account- Non- Resident Indian: Explained


Introduction:

  • NRI – an Indian citizen who lives outside India
  • It refers the funds deposited by NRI’s with a financial institution authorised by the RBI to provide such services.
  • Opened by the account holder personally, instead of by someone holding their Power of Attorney.
  • Banks provide different types of account options for NRI’s.

NRE (Non-Resident External) Account –

  • Account Type- Savings account, current account and Fixed deposit.
  • This is an Indian rupee denominated account.
  • Maintained individually or jointly with other NRI.
  • Interest income is free from income tax.
  • Nomination facility is available.
  • The account balance is fully Repatriable.

NRO (Non-Resident Ordinary) Account-

  • Account Type- Savings account, current accounts and Fixed deposit.
  • NRO account for local banking transactions denominated in Indian Rupees. Only Indian rupee can be withdrawn.
  • Indian nationals can open an NRO account as a normal bank account before leaving the country to work abroad.
  • Joint account with other NRI’s or close resident is permitted.
  • Interest income is subject to income tax.

FCNR (Foreign Currency Non-Resident) Account-

  • Account Type – Fixed deposit.
  • This account can be opened as Term deposit in following currencies: US Dollar, Great Britain Pound, EURO, Japanese Yen, Canadian dollar, Australia Dollar.
  • A joint account can be created only with NRI’s.
  • Interest income is free from income tax.
  • The account balance is fully Repatriable.

RFC (Resident Foreign Currency) account –

  • Non-Resident Indians who has returned to India after staying for a minimum period of one year, the account is maintained as RFC (Resident Foreign Currency) account.
  • Account type - Savings and Term deposit.
  • It can be opened without any regulatory approval from the RBI.
  • The credit of account can be – balance in NRE and FCNR accounts at the time of return, income from overseas assets.
  • Interest earned on RFC account is subject to Tax.

ECGC (Export Credit Guarantee Corporation of India)

Headquarters- Mumbai, Maharashtra, India
Owned by – Government of India based in Maharashtra and controlled by Ministry of
Commerce.
Objective – To provide credit guarantee insurance support to Indian exporters against
Payment Risks.

The role of ECGC:

  • Exporters approach ECGC to get the approval of the buyer with the amount of limit.
  • It provides the information of creditworthiness of the buyer.
  • Collects premium on the amount of approval and issue an insurance policy.
  • Provides guidance in export-related activities.
  • Makes available information on different countries with its own credit ratings.
  • Makes it easy to obtain export finance from financial Institutions.
  • Assists exporters in recovery bad debt.

FEMA (Foreign Exchange Management Act)-

Objective – To facilitate external trade and payments of Foreign exchange market in India

Role:

  • Assists the country by encouraging external payment and trade
  • It encourages the orderly maintenance and development of the foreign exchange market in India.

FEDAI (Foreign Exchange Dealers Association of India)-

It is an association of banks specialising in the foreign exchange activities in India.

Role –

  • It regulates governing rules and determines the commission and charges with the interbank foreign exchange business.
  • Overtook the day to day Forex transactions in India.
  • Responsible for accrediting India’s foreign exchange brokers and announcing the exchange rates to its member banks.

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