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Non Resident Ordinary Rupee Accounts (NRO A/cs)

 
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Rupee accounts other than accounts opened under Special schemes like Non-Resident (External) Account scheme with Authorized Dealers in India by persons, firms and other organizations outside India are called Non-Resident (Ordinary) Accounts (NRO Accounts). However, unless specifically stated, these instructions do not cover accounts of foreign nationals.

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Any person resident outside India (other than a person resident in Nepal and Bhutan) is eligible to open NRO account subject to compliance of following conditions.

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Individuals/entities of Pakistan nationality/ownership require prior approval of RBI for opening the accounts.

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Authorised Dealer banks are permitted to open NRO accounts of individuals of Bangladesh nationality holding valid visa and residential permit issued by Foreign Registration office. However opening of accounts by entities of Bangladesh ownership continue to require approval of RBI.

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Account should be opened by the account holder himself. Power of attorney holder is not permitted to open the account.

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Authorised Dealer can open and maintain Domestic Rupee accounts for a person resident in Nepal/Bhutan.

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When a person resident of India leaves India for Nepal and Bhutan for taking up employment or for carrying on business or vocation or for any other purpose indicating his intention to stay in Nepal or Bhutan for an uncertain period, his existing account will continue as a resident account. Such account will not be designated as Non-resident (Ordinary) Rupee account (NRO).

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Account can be held jointly with residents.

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The accounts will be in Indian rupees and maintained in the form of ‘Savings’ or ‘Current” or ‘Term deposit’ or ‘Cumulative deposit’ account etc.

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Period of Term deposit is as applicable to resident accounts.

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Rate of Interest will be in accordance with the directions/instructions issued by RBI from time to time. For Current account, no interest is payable. For Savings, Cumulative and Term deposits, Banks are free to determine the interest rates. However it will not be higher than those offered on comparable domestic rupee deposits.

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Balance in NRO accounts other than the cases indicated below are not eligible for remittances outside India without approval of RBI
  1. bullet Current income in India (like rent, dividend, pension, interest earned by NRI/PIO) of the account holder net of applicable taxes.
  2. bullet Up to USD 1 (one) million per financial year (April-March) out of balances in the account for any bonafides purpose like sale proceeds of assets (financial as well as immovable) in India acquired by way of purchase/ inheritance/ legacy or settlement subject to certain conditions. 

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In respect of individual NRI account holder nomination in favour of a Resident Indian or a Non-Resident Indian is permitted.

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Interest income earned on balances standing to the credit of NRO accounts is taxable as per the prevailing directives.

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Operations in NRO account by a Power of Attorney holder are restricted to withdrawals for permissible local payments in rupees, remittance of current income to the account holder outside India or remittance to the account holder himself through normal banking channels.

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Loans in India in Indian Rupees to the Account holder/s and to Third parties are permitted for following purposes.
  1. bullet Personal purposes or for carrying on business activities.
  2. bullet Direct investment in India on non-repatriation basis by way of contribution to the capital of Indian firms/companies.
  3. bullet Acquisition of flat/house in India for his own residential use subject to relevant regulations under FEMA 1999.
  4. bullet Loans cannot be utilized for the purpose of on-lending or for carrying on agriculture or plantation activities or for investment in real estate business.
  5. bullet Loans outside India to the Account holder/s and to Third parties are not permitted.
  6. bullet Loans in India in Foreign currency to the Account holder/s and to Third parties are also not permitted.

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Click here for NRO account opening form.

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Click here for Interest rates on NRO deposits

 
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