RBI/2015-16/78
Master Circular No. 2/2015-16
July 1, 2015
To,
All Authorised Dealer Category – I banks and Authorised banks
Madam / Sir,
Master Circular on Non-Resident Ordinary Rupee (NRO) Account
The acceptance of deposits by an Authorised Dealer /Authorised bank from
persons resident outside India is regulated by the provisions of sub-sections
(1) and (2) of section 6 of the Foreign Exchange Management Act, 1999 read with
FEMA
Notification No.5/2000 - RB dated May 3, 2000, as amended from time to
time.
- This Master Circular consolidates the existing instructions on the subject
of “Non Resident Ordinary Rupee (NRO) Account” at one place. The list of
underlying circulars /notifications consolidated in this Master Circular is
furnished in the Appendix.
- This Master Circular is being updated from time to time as and when fresh
instructions are issued. The date up to which the Master Circular has been
updated is suitably indicated.
- This Master Circular may be referred to for general guidance. The Authorised
Dealer Category – I banks and Authorized banks may refer to respective circulars
/ notifications for detailed information, if so needed.
Yours faithfully,
(A K Pandey)
Chief General Manager
- Definitions
Non-Resident Indian (NRI)
NRI for this purpose is defined in Regulation 2 of Notification No. FEMA 5/2000-
RB dated May 3, 2000. In terms of this Notification, an NRI means a person
resident outside India who is a citizen of India or is a person of Indian
origin.
Person of Indian Origin (PIO)
PIO for this purpose is defined in Regulation 2 of FEMA Notification ibid as a
citizen of any country other than Bangladesh or Pakistan, if
(a) he at any time held Indian passport; or
(b) he or either of his parents or any of his grandparents was a citizen of
India by virtue of the Constitution of India or the Citizenship Act, 1955 (57 of
1955); or
(c) the person is a spouse of an Indian citizen or a person referred to in
sub-clause (a) or (b).
- Eligibility
(a) Any person resident outside India (as per Section 2 (w) of FEMA, 1999), may
open and maintain NRO account with an Authorised Dealer or an Authorised Bank
for the purpose of putting through bona fide transactions denominated in Indian
Rupees, not involving any violation of the provisions of FEMA, Rules and
Regulations made there under.
(b) Opening of accounts by individuals/ entities of Pakistan nationality/
ownership and entities of Bangladesh ownership requires prior approval of the
Reserve Bank.
(c) Opening of accounts by individual/s of Bangladesh nationality may be allowed
by Authorised Dealer or Authorised Bank, subject to satisfying itself that the
individual/ s hold a valid visa and valid residential permit issued by Foreigner
Registration Office (FRO)/ Foreigner Regional Registration Office (FRRO)
concerned.
- Types of Accounts
NRO accounts may be opened / maintained in the form of current, savings,
recurring or fixed deposit accounts. Rate of interest applicable to these
accounts and guidelines for opening, operating and maintenance of such accounts
shall be in accordance with directives/instructions issued by the Reserve Bank
from time to time.
- Joint Accounts with Residents / Non- Residents
The accounts may be held jointly with residents and / or with non-residents.
- Permissible Credits / Debits
A. Credits
(i) Proceeds of remittances from outside India through normal banking channels
received in any permitted currency.
(ii) Any foreign currency, which is freely convertible, tendered by the account
holder during his temporary visit to India. Foreign currency exceeding USD 5000
or its equivalent in the form of cash should be supported by currency
declaration form. Rupee funds should be supported by encashment certificate, if
they represent funds brought from outside India.
(iii) Transfers from rupee accounts of non-resident banks.
(iv) Legitimate dues in India of the account holder. This includes current
income like rent, dividend, pension, interest, etc.
(v) Sale proceeds of assets including immovable property acquired out of rupee /
foreign currency funds or by way of legacy /inheritance.
(vi) Resident individual may make a rupee gift to a NRI/PIO who is a close
relative of the resident individual [close relative as defined in Section 6 of
the Companies Act, 1956] by way of crossed cheque /electronic transfer. The
amount shall be credited to the Non-Resident (Ordinary) Rupee Account (NRO) a/c
of the NRI / PIO and credit of such gift amount may be treated as an eligible
credit to NRO a/c. The gift amount would be within the overall limit prescribed
under the Liberalised Remittance Scheme (LRS) for a resident individual.
(vii) Resident individual may lend to a Non-resident Indian (NRI)/ Person of
Indian Origin (PIO) close relative [means relative as defined in Section 6 of
the Companies Act, 1956] by way of crossed cheque /electronic transfer, subject
to conditions within the overall limit prescribed under the Liberalised
Remittance Scheme available for a resident individual. The loan amount should be
credited to the NRO a/c of the NRI /PIO. Credit of such loan amount may be
treated as an eligible credit to NRO a/c;
B. Debits
(i) All local payments in rupees including payments for investments in India
subject to compliance with the relevant regulations made by the Reserve Bank.
(ii) Remittance outside India of current income like rent, dividend, pension,
interest, etc. in India of the account holder.
(iii) Remittance up to USD one million, per financial year (April- March), by
NRI, subject to payment of tax, as applicable.
(iv) Transfer to NRE account of NRI within the overall ceiling of USD one
million per financial year subject to payment of tax, as applicable
- Remittance of Assets
A citizen of a foreign state, not being a citizen of Nepal or Bhutan or a Person
of Indian Origin (PIO), who –
has retired from an employment in India, or
has inherited assets from a person referred to in sub-section (5) of Section 6
of the FEMA; or
is a widow resident outside India and has inherited assets of her deceased
husband who was an Indian citizen resident in India,
may remit an amount, not exceeding USD one million per financial year out of the
balances in the account, on production of documentary evidence in support of
acquisition, inheritance or legacy of assets by the remitter, subject to payment
of taxes as prescribed by Central Board of Direct Taxes from time to time.
- Foreign nationals of non-Indian origin on a visit to India
NRO (current/savings) account can be opened by a foreign national of non-Indian
origin visiting India, with funds remitted from outside India through banking
channel or by sale of foreign exchange brought by him to India. The balance in
the NRO account may be converted by the Authorised Dealer bank into foreign
currency for payment to the account holder at the time of his departure from
India provided the account has been maintained for a period not exceeding six
months and the account has not been credited with any local funds, other than
interest accrued thereon. In case the account has been maintained for a period
more than six months, applications for repatriation of balance will have to be
made by the account holder concerned on plain paper to the Regional Office
concerned of the Reserve Bank.
- Grant of loans / overdrafts by the Authorised Bank to account holders and
third parties
(a) Loans to non-resident account holders and to third parties may be granted in
Rupees by Authorized Dealer / bank against the security of fixed deposits
subject to the following terms and conditions:
(i) The loans shall be utilised only for meeting borrower's personal
requirements and/or business purpose and not for carrying on
agricultural/plantation activities or real estate business or for re-lending.
(ii) Regulations relating to margin and rate of interest, as stipulated by
Reserve Bank, from time to time, shall be complied with.
(iii) The usual norms and considerations as applicable in the case of advances
to trade/industry shall be applicable for such loans/facilities granted to third
parties.
(b) Authorised Dealer / bank may permit overdraft in the account of the account
holder subject to their commercial judgement and in compliance with the interest
rate etc. directives.
- Change of residential status of account holder
(a) From Resident to Non-resident
(i) When a person resident in India leaves India for a country (other than Nepal
or Bhutan) for taking up employment or for carrying on business or vocation
outside India or for any other purpose indicating his intention to stay outside
India for an uncertain period, his existing account should be designated as a
Non- Resident (Ordinary) Account.
(ii) Foreign nationals who come to India on employment and become residents in
terms of section 2 (v) of FEMA, 1999 and are eligible to open/hold a resident
savings bank account are permitted to re-designate their resident account
maintained in India as NRO account on leaving the country after their employment
to enable them to receive their legitimate dues subject to certain conditions.
(b) From Non- resident to Resident
NRO accounts may be re-designated as resident Rupee accounts on return of the
account holder to India for taking up employment, or for carrying on business or
vocation or for any other purpose indicating his intention to stay in India for
an uncertain period. Where the account holder is only on a temporary visit to
India, the account should continue to be treated as non-resident during such
visit.
- Treatment of loans /overdrafts in the event of change in the residential
status of the borrower
In case of a person who had availed of loan or overdraft facilities while
resident in India and who subsequently becomes a person resident outside India,
the Authorised Dealer / bank may at their discretion and commercial judgement
allow continuance of the loan/overdraft facilities. In such cases, payment of
interest and repayment of loan may be made by inward remittance or out of
legitimate resources in India of the person concerned.
- Payment of funds to Non-resident nominee
The amount due/payable to non-resident nominee from the NRO account of a
deceased account holder shall be credited to NRO account of the nominee with an
Authorised dealer / bank in India.
- Operation of NRO account by Power of Attorney holder
Powers have been delegated to the Authorized Dealers/ Authorised banks to allow
operations on an NRO account in terms of a Power of Attorney granted in favour
of a resident by the non-resident individual account holder provided such
operations are restricted to:
(i) All local payments in Rupees including payments for eligible investments
subject to compliance with relevant regulations made by the Reserve Bank; and
(ii) Remittance outside India of current income in India of the non-resident
individual account holder, net of applicable taxes.
(iii) The resident Power of Attorney holder is not permitted to repatriate
outside India funds held in the account other than to the non-resident
individual account holder himself nor to make payment by way of gift to a
resident on behalf of the non- resident account holder or transfer funds from
the account to another NRO account.
- International Credit Cards
Authorised Dealer banks have been permitted to issue International Credit Cards
to NRIs/PIO, without prior approval of Reserve Bank. Such transactions may be
settled by inward remittance or out of balances held in the cardholder’s FCNR
(B) / NRE / NRO Accounts.
- Income-Tax
The remittances (net of applicable taxes) will be allowed to be made by the
Authorised Dealer banks on production of requisite information in the formats
prescribed by the Central Board of Direct Taxes, Ministry of Finance, Government
of India from time to time. Reserve Bank of India will not issue any
instructions under FEMA, 1999 clarifying tax issues. It shall be mandatory on
the part of Authorised Dealers to comply with the requirement of tax laws, as
applicable.
- System of quarterly reporting of opening of NRO accounts by individual/s of
Bangladesh:
i. The Authorised bank should put in place a system of quarterly reporting
whereby each branch of the Authorised bank shall maintain a record of the bank
accounts opened by individual/s of Bangladesh nationality and details of such
account shall be forwarded to their Head Office. The Head Office of the bank
shall furnish details of such accounts on quarterly basis to the Under Secretary
(Foreigners), Ministry of Home Affairs, NDCC-II Building, Jai Singh Road, New
Delhi - 110 001 E Mail.
ii. The report shall contain details of Name/s of the Individual/s, Date of
arrival in India, Passport No. and Place/Country of issue, Residential permit
reference and date and place of issue, Name of the FRO/ FRRO concerned and the
Complete address and contact number of the branch where the bank account is
being maintained.
Annex 1
Statement/returns to be submitted to the Reserve Bank
Particulars of statement |
Periodicity |
Relevant instructions |
Facilities to NRIs/PIO and Foreign Nationals – Liberalisation -
Remittance from NRO account. |
Monthly |
A.P (DIR Series) Circular No. 106 dated February 18, 2014 |
APPENDIX
List of notifications / circulars which have been consolidated in this Master
Circular – Non-Resident Ordinary Rupee (NRO) Account
https://rbi.org.in/Scripts/BS_APCircularsDisplay.aspx
https://rbi.org.in/Scripts/Bs_FemaNotifications.aspx
Sl. No. Circular No. Date
1.
Notification No. FEMA 62/2002-RB May 13, 2002
2.
Notification No. FEMA 97/2003-RB July 8, 2003
3.
Notification No. FEMA 119/2004-RB June 29, 2004
4.
Notification No. FEMA 133/2005-RB April 1, 2005
5.
Notification No. FEMA 156/2007-RB June 13, 2007
1.
A.P. (DIR Series) Circular No.45 May 14, 2002
2.
A.P. (DIR Series) Circular No.1 July 2, 2002
3.
A.P. (DIR Series) Circular No.5 July 15, 2002
4.
A.P. (DIR Series) Circular No.19 September 12, 2002
5.
A.P. (DIR Series) Circular No.26 September 28, 2002
6.
A.P. (DIR Series) Circular No.27 September 28, 2002
7.
A.P. (DIR Series) Circular No.56 November 26, 2002
8.
A.P. (DIR Series) Circular No.59 December 9, 2002
9.
A.P. (DIR Series) Circular No.67 January 13, 2003
10.
A.P. (DIR Series) Circular No.43 December 8, 2003
11.
A.P. (DIR Series) Circular No.45 December 8, 2003
12.
A.P. (DIR Series) Circular No.62 January 31, 2004
13.
A.P. (DIR Series) Circular No.43 May 13, 2005
14.
A.P. (DIR Series) Circular No.12 November 16, 2006
15.
A.P. (DIR Series) Circular No.64 May 25, 2007
16.
A.P. (DIR Series) Circular No.70 June 09, 2011
17.
A.P. (DIR Series) Circular No.17 September 16, 2011
18. A.P. (DIR Series) Circular No.18 September 16, 2011
19.
A.P. (DIR Series) Circular No.117 May 7, 2012
20.
A.P (DIR Series) Circular No. 82 February 11, 2013
21.
A.P (DIR Series) Circular No. 106 February 18, 2014
22.
A.P (DIR Series) Circular No. 151 dated June 30, 2014
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