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NRI Bank Account

An NRI bank account is a special bank account for Indian citizens residing outside India.

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Content:

  1. NRE Bank Account
  2. NRO Bank Account
  3. NRI account opening documents
  4. NRI Bank account opening process
  5. NRI Bank Account Charges
  6. NRI PIS Charges
  7. FCNR Bank Account

An NRI bank account is a special bank account for Indian citizens residing outside India. These accounts are tailored to the specific banking needs of NRIs and allow them to manage their finances in India while living abroad. Opening an NRI bank account is based on two main factors: repatriation of funds and non-repatriation of funds. The NRI bank account types include:

NRE Bank Account

An NRE (Non-Resident External) account is a type of bank account in India specifically designed for NRIs to manage their foreign earnings in Indian Rupees (INR).

NRIs can deposit foreign currency into NRE accounts, which is converted into INR upon deposit. Although this provides the convenience of direct foreign currency deposits, currency conversion charges may apply during the conversion process.

The principal amount and interest earned on an NRE account is fully repatriable, making it easier for NRIs to manage and transfer funds. Moreover, the interest earned on NRE accounts is tax-free in India.

NRE Account Features

  1. An NRE account is maintained in Indian Rupees.
  2. Deposits can be made in foreign currency and withdrawals can be made in Indian currency in India.
  3. The foreign currency deposited is converted into Indian rupees.
  4. Both the principal amount and the interest earned are fully repatriable. This means that NRIs can transfer funds back to their country of residence without any restrictions.
  5. The interest earned on an NRE account is exempt from income tax in India. There is also no wealth tax or gift tax on the funds in this account.
  6. It can be opened jointly with another NRI, but not with a resident Indian.
  7. Funds can be transferred freely between NRE and NRO (Non-Resident Ordinary) accounts. In addition, transfers from NRE to other NRE or FCNR (Foreign Currency Non-Resident) accounts are also permitted.
  8. The account can be accessed through various banking channels such as online banking, ATMs and mobile banking.
  9. It is primarily used by NRIs to conveniently manage and save their foreign income and make investments in India.

NRE Account Types

Based on the nature of investments, an NRI bank account can be a PIS (account with PIS approval) account or non-PIS account (account with no PIS approval).

1. NRE PIS account

The NRE PIS (Non-Resident External Portfolio Investment Scheme) account is an NRE savings bank account with PIS permission. This account is primarily used for NRIs investment in equity stocks in India. All transactions in this account are reported to RBI by the bank.

An NRE account is designed for repatriation purposes. Therefore, all transactions made through an NRE-PIS account are repatriable.

To open an NRE-PIS account:

  • Open an NRE savings account.
  • Submit the PIS (Portfolio Investment Scheme) application form to the bank.
  • The bank then applies for the PIS certificate/approval on behalf of the NRI.
  • Once PIS approval is received, it is linked to the NRE savings account.
  • The NRE savings account is then converted into an NRE-PIS account.

All transactions in the NRE account will be reported to RBI once the PIS approval is linked to the NRE account.

Advantages of NRE PIS account

  • Buying and selling of shares on NSE and BSE is allowed.
  • Income or funds earned from trading is repatriable.
  • Interest earned on NRE accounts is tax-free in India.
  • All the transactions done using the NRE PIS account are reported to RBI by the bank thereby ensuring regulatory compliance.
  • This account is offered by all major banks including ICICI, HDFC bank, Axis bank, and SBI.

Disadvantages of NRE PIS account

  • Setting up an NRE-PIS account involves several steps, including obtaining a PIS certificate, which can be time-consuming.
  • The NRE-PIS account can only be used to invest in the Indian stock market, which limits the investment options (IPO, Bonds, F&O) compared to other types of accounts.
  • Currency conversion between foreign currency and Indian rupees is exposed to exchange rate fluctuation risks.
  • Cannot use to trade in the F & O segment.

2. NRE Non-PIS account

The NRE account without PIS approval is a normal NRE savings account. An ordinary NRE account is used to manage income earned abroad. NRIs can invest in IPOs, pre-IPOs, ESOPs and mutual funds through NRE accounts without a PIS account. Trading transactions in this account are not reported to RBI.

Funds or income earned from investments can be converted into foreign currency freely as this account is a repatriable account.

This account cannot be used for investing/trading in the Indian stock market. NRIs cannot buy or sell shares in the secondary market.

Advantages of NRE account (Non-PIS)

  • Funds in an NRE account can be freely repatriated. The money can be transferred back to the NRI's country of residence without restrictions.
  • Interest earned on NRE accounts is tax-free in India.
  • NRIs can use NRE accounts to invest in IPOs, pre-IPOs, ESOPs, and mutual funds, broadening their investment horizon.
  • It can also be used to pay charges like account opening charges, NRI Demat Account AMC etc.
  • Funds can be transferred from an NRE account to another NRE/FCNR account without restrictions.

Disadvantages of NRE account (Non-PIS)

  • NRIs cannot use this account to invest or trade in the Indian stock market.
  • Foreign currency conversion to Indian Rupees and vice versa may incur charges and might not always be at the most favorable exchange rates.
  • Only foreign earnings can be deposited in this account.
  • Investment and trading in F&O is not permitted using an NRE account.

NRO Bank Account

An NRO (Non-Resident Ordinary) account allows an NRI to manage their income earned in India, such as rent, dividends, pension, and interest. This is an account maintained in Indian rupees and can receive funds in Indian as well as foreign currency. Interest earned on the NRO account is subject to income tax in India.

NRO account features

  • Ideal for managing and investing Indian earnings on a non-repatriation basis.
  • Funds in an NRO account can be repatriated within certain rules and limits laid down by the RBI.
  • Currently, the repatriation limit is up to USD 1 million (or its equivalent in other currencies) per financial year for all purposes such as education, medical expenses and other necessary expenses, provided the relevant taxes have been paid.
  • The account is maintained in Indian Rupees.
  • Interest earned is subject to income tax in India.
  • Can be used for a wide range of transactions, including receiving rent, pension and other regular payments.
  • Can be used for investments in shares in secondary markets, IPOs, rights issues, ESOPs, mutual funds, bonds and government securities.
  • Can be opened jointly with another NRI or a resident Indian.
  • Allows deposits in foreign currency converted into Indian Rupees.

NRO account types

1. NRO PIS account

An NRO PIS bank account is an ordinary non-resident savings account with PIS approval from the RBI. It is typically opened to manage income earned in India by an NRI, such as rental income, interest, and pension.

NRIs can buy or sell shares in the secondary market, and can invest in IPOs, and mutual funds.

Advantages of NRO PIS account

  • Allows NRIs to invest in Indian stocks, mutual funds, and IPOs.
  • Income earned in India can be managed efficiently.
  • Gains from investments are repatriable up to USD 1 million per financial year.
  • Transactions are reported to the RBI to ensure regulatory compliance.
  • Banks will assist in obtaining PIS permission and account management.
  • A resident Power of Attorney (PoA) holder can operate the account.

Disadvantages of NRO PIS account:

  • The principal amount is not freely repatriable.
  • Requires additional paperwork for PIS permission.
  • Income earned in India is subject to Indian tax laws.
  • Reporting transactions to RBI can add a layer of compliance.
  • Not all banks may offer seamless integration of PIS services.
  • Potential currency conversion risks due to exchange rate fluctuations.

2. NRO Non-PIS account

An NRO Non- PIS account is a type of Non-Resident Ordinary (NRO) savings bank account for NRIs which does not have PIS (Portfolio Investment Scheme) permission attached. This account is primarily used for managing income earned in India such as income, rent and dividends. Transactions from this account are not reported to the RBI.

Through this account, NRIs can invest in shares (secondary market), IPOs, ESOPs, mutual funds, exchange traded funds, F&O and the sale of stocks received as gifts.

Advantages:

  • Simplifies management of income earned in India, such as rent, dividends, and pensions.
  • No need for PIS permission for share trading.
  • Allows to invest in Equity Derivatives (F&O).
  • Permits to invest in other investment options like IPOs, ESOPs, Bonds, NCDs (secondary market), Government securities and Rights Issues.
  • Can be used to make non-brokerage payments, such as account opening fees and Demat Account AMC.
  • Transactions are not reported to the RBI, reducing compliance requirements.

Disadvantages:

  • The principal amount is not freely repatriable.
  • Gains from investments have repatriation limits, subject to additional paperwork.
  • Income earned in India is subject to Indian tax laws.
  • May involve currency conversion risks due to exchange rate fluctuations.
  • Limited to managing and investing Indian earnings only, not foreign income.
  • Not all brokers allow Equity trading using NRO Non-PIS accounts.

NRIs, PIOs, and OCI cardholders can open any of the above accounts as per their requirement and investment goals.

NRI account opening documents

The NRE account documents and NRO account documents are the same. NRIs can open NRE and NRO accounts with banks such as ICICI, HDFC, Axis and many more.

This table captures the identification document requirements for NRI, PIO, and OCI status holders for various banking procedures. Documents required for opening an NRI bank account in India:

NRI bank account opening documents

Identification Documents

If you are an NRI status holder

If you are a PIO / OCI status holder

Proof of Status

Any one of the following:

. Valid Visa / Work Permit

. Any one of the following for NRIs with seafarer work profile:

1. Valid job contract.

2. Continuous Discharge Certificate (CDC), if the disembarkation stamp on CDC is not more than 6 months old.

3. Expired contract letter (if the disembarkation stamp on CDC is not more than 6 months old).

4. Last pay slip evidencing employment with a shipping company (not more than 6 months old).

. Any one of the following: Valid PIO Card

. Valid OCI Card

. Relevant pages of the Passport of parents or grandparents, establishing their Indian origin

. Marriage Certificate establishing the spouse's Indian origin

Proof of Identity

Relevant pages of passport with identity details.

Relevant pages of passport with identity details.

Current Address document (Overseas only)

Proof of NRI status

Anyone of the following:

1. Relevant pages of Passport (mentioning overseas address).

2. Government-issued National Identity Card at the country of residence.

3. Driving License issued abroad.

4. Utility Bill (Electricity, Telephone, Gas) Original copy of latest overseas bank account or existing NRE / NRO account statement carrying overseas address.

5. Employer's certificate.

6. NRIs with seafarer work profiles and on the ship can either give the employer's overseas address or Indian address.

Same as NRIs

Proof of Permanent Address (Overseas / Indian)

Any one of the following:

. Relevant pages of Passport

. Driving License

. Voter Identity Card

. Aadhaar Letter/Card

Relevant pages of Passport

Additional proof for applicants who are not visiting the Branch to open the account (Non-face-to-face)

Any one of the following:

. Cheque drawn from the overseas Bank account.

. Cancelled / Paid Cheque of the overseas Bank account.

. Proof of Income / Pay Slip / Tax return

Same as NRIs

Other requirement

. 2 passport size photograph

. Certified English-translated copy of the document wherever it is in a foreign language.

. Application form for PIS permission. Generally, the bank where NRIs open an account issues the PIS letter.

Same as NRIs

Note:

  • The above mentioned are generic documents. The list may vary slightly from bank to bank.
  • The PIS application form is required when an NRI wishes to trade in the Indian stock market.
  • All documents must be attested by any one of the following:
    • Authorised officials of overseas branches of scheduled commercial banks registered in India,
    • Branches of overseas banks with whom Indian banks have relationships,
    • Notary Public Abroad,
    • Court Magistrate,
    • Judge, or
    • Indian Embassy/Consulate General in the country where the non-resident customer resides.

NRI Bank account opening process

The NRI bank accounts can be opened offline or online with the leading banks in India. The offline and online NRE and NRO account opening procedures are the same.

1. Offline account opening process for NRE and NRO account

Steps to open an NRI Bank Account through offline mode:

  1. Choose the type of account: NRE or NRO
  2. Select a bank that offers NRI banking services such as ICICI Securities, HDFC, Kotak Mahindra, etc.
  3. Obtain the NRI account opening form from the bank's website or branch.
  4. Fill the account opening form.
  5. Gather the required documents.
  6. Submit the documents.
  7. Complete KYC (Know Your Customer) verification.
  8. Once the account is approved, receive the account details, chequebook, debit card, and Internet banking credentials.
  9. Make an initial deposit to activate the account.

2. NRE and NRO Account Online Opening (NRI bank account opening online)

  1. Choose a bank that offers NRI banking services.
  2. Go to the official website of the bank.
  3. Select the option to open an NRE (Non-Resident External) or NRO (Non-Resident Ordinary) account.
  4. Enter your basic and personal details such as name, email address, date of birth, nationality, passport details and contact number.
  5. Save the information to generate a customer reference number (CRN). Make a note of this CRN for future reference.
  6. Provide your current contact information, including your address in India and abroad.
  7. Verify your email address and mobile number, if required.
  8. Provide other details such as nominee information, initial deposit amount and other required details.
  9. Save the information to generate an Account Reference Number (ARN). Make a note of this ARN for future reference.
  10. Upload the required documents: Proof of identity and address, proof of status
  11. KYC verification: Video KYC.
  12. Once your KYC verification is complete, you will receive an email with your account details.
  13. Make the required initial deposit to activate your account.

Note: The above-mentioned process is generic and may vary from bank to bank.

NRI Bank Account Charges

NRE (Non-Resident External) and NRO (Non-Resident Ordinary) accounts are subject to different fees for their management and use. These fees may vary from bank to bank.

  1. Balance Maintenance Criteria: This refers to the minimum average balance that must be maintained in an NRI bank account, which is normally calculated on a monthly or quarterly basis. Failure to maintain this balance often results in penalty fees. The criteria vary by account type and bank, and maintaining this balance helps avoid penalties while ensuring that the account remains active.
  2. NRE/NRO Account Maintenance Charge: This refers to the fee that banks can charge for maintaining an NRE (Non-Resident External) or NRO (Non-Resident Ordinary) account. It is a periodic fee that is usually charged annually to cover the costs of maintaining the account and providing banking services. This fee is independent of any penalties or fees associated with failure to maintain a minimum balance in the account.
  3. ATM Charges: These are fees incurred for the use of ATMs, in particular when transactions are made at ATMs of other banks or for withdrawals abroad. The fees may include charges for checking the account balance, for withdrawals or for the rejection of transactions due to insufficient funds.
  4. Debit Card Charges: These include fees for issuing and renewing debit cards, fees for replacing lost cards and usage fees for international transactions. Debit card fees may also include transaction fees for purchases at points of sale or online.
  5. Internet Banking Hardware Token: This is a physical device provided by the bank to ensure secure access to Internet banking services. It generates a one-time password (OTP) for transactions. Banks charge fees for issuing and replacing these tokens.
  6. Cash Transaction Charges: Fees related to cash deposits and withdrawals, especially if the transactions exceed a certain number or value set by the bank. This fee encourages digital transactions and restricts the excessive use of cash transactions.
  7. Cheque Book Charges: These are fees for issuing chequebooks that exceed the free limit provided by the bank.
  8. Transfer Charges: Costs for the transfer of funds between accounts using methods such as NEFT (National Electronic Funds Transfer), RTGS (Real-Time Gross Settlement) or IMPS (Immediate Payment Service). The fees may vary depending on the amount of the transfer and the method used.
  9. Convenience Fees: These fees are levied for additional banking services such as SMS alerts, balance certificates, account closure, or even for maintaining a physical passbook. These fees cover the cost of providing these extra conveniences to the account holder.
  10. Transaction Failure Charges: Penalties imposed when transactions fail due to insufficient funds. These may include fees for bounced cheques, failed electronic payments (like ECS/NACH) or declined ATM transactions.
  11. Outstation Cheque Collection Charges: Fees for processing cheques that are drawn on banks located in cities other than where the account is maintained. The charges typically depend on the cheque amount and the distance between the bank branches involved.
  12. Remittance Charges: Costs associated with sending or receiving money internationally. These charges cover services like wire transfers, foreign currency drafts, and inward remittance processing. Banks may also charge for converting foreign currency into INR.
  13. MC/DD/Cheque Related Charges: Fees related to the issuance, cancellation, or revalidation of Demand Drafts (DD), multi-city cheques, or other cheque-related services. These charges ensure the processing and security of such transactions.
  14. Service Requests Charges: Fees charged for specific requests made by the account holder, e.g. for issuing duplicate passbooks, providing physical account statements or processing stop payment instructions. These charges compensate the bank for the additional resources it requires to fulfil these requests.

NRI PIS Charges

NRI PIS (Portfolio Investment Scheme) charges can be broken into 3 types of charges. These include:

  1. PIS Issuance Charges: These are the fees charged by the bank for issuing a PIS (Portfolio Investment Scheme) account. This charge is applicable when an NRI opens a PIS account, which allows them to invest in the Indian equity markets on a repatriation basis.
  2. PIS AMC (Annual Maintenance Charges): This is the annual fee charged by the bank for maintaining the PIS account. It covers the administrative costs associated with maintaining the account throughout the year.
  3. PIS Reporting Charges: These are fees charged for reporting transactions (both purchases and sales) through the PIS account to the Reserve Bank of India (RBI) as per statutory provisions. The fee is generally charged per trading date.
  4. Non-PIS Reporting Charges: These fees are applicable for the reporting of non-PIS transactions, i.e. transactions that are not covered by the PIS scheme, but still require regulatory reporting. Similar to PIS reporting, these charges are also levied per transaction date.

These charges ensure that the transactions made under the PIS are in compliance with RBI guidelines and are properly reported.

FCNR Bank Account

FCNR stands for Foreign Currency Non-Resident Account. FCNR is a special type of account for NRIs to open only fixed-term deposits (FD) with a minimum tenure of 1 year and a maximum of 5 years.

It is a foreign currency-denominated account that allows NRI to transfer their foreign income to India in the currency of their country of residence.

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Frequently Asked Questions

  1. Yes, NRIs can open a bank account in India. NRIs can open NRE, NRO accounts in the form of savings, current, term deposit or recurring deposit. They can also open a special account viz, FCNR term deposit account.

    Types of bank accounts for NRIs

    1. NRE (Non-Resident External) account

    • To park and manage overseas earnings in India.
    • Both principal and interest are fully repatriable.
    • Interest earned is tax-free in India.
    • Ideal for saving and transferring foreign earnings to India.
    • Allows investment in IPOs, ESOPs, Rights Issues and Mutual funds.
    • PIS approved accounts facilitate stock market trading and investment.

    2. NRO (Non-Resident Ordinary) account

    • To manage income earned in India.
    • The principal amount can be repatriated up to USD 1 million per financial year with proper documentation and payment of applicable taxes. Interest is repatriable after tax deduction.
    • Interest earned is subject to tax in India.
    • Ideal for managing income sources like rent, pension, dividends, etc., in India.
    • Allows investment in shares in secondary market, IPOs, rights issue, mutual funds, bonds and G-securities.

    3. FCNR (Foreign Currency Non-Resident) Account

    • To maintain deposits in foreign currency.
    • Major foreign currencies (USD, GBP, EUR, etc.).
    • Both principal and interest are fully repatriable.
    • Taxation: Interest earned is tax-free in India.
    • Ideal for NRIs who wish to avoid currency conversion risk and earn interest in foreign currency.

     

  2. Yes, as an NRI, you can open both an NRE (Non-Resident External) and an NRO (Non-Resident Ordinary) account. Many banks in India offer the option to open both types of accounts simultaneously.

    The process and document requirements for both the accounts are the same.

     

  3. Yes, an NRE (Non-Resident External) account can be converted to an NRO (Non-Resident Ordinary) account under certain circumstances. This usually happens when an NRI returns to India and changes their residential status to Resident but Not Ordinarily Resident (RNOR) or Resident.

    Reasons for Conversion:

    1. Change in Residential Status: When an NRI returns to India and becomes a resident as per Indian tax laws, the NRE account must be converted to an NRO account.
    2. Regulatory Compliance: As per RBI guidelines, once the residential status changes, maintaining an NRE account is not permissible.

     

  4. Yes, an NRE account can be opened online. NRIs can open NRE accounts online with SBI, Axis, HDFC Bank and more. You can check with your bank for the options provided for account opening.

    Following are the NRE account opening requirements:

    NRE account opening documents:

    1. Valid proof of identity:
      • Copy of valid Passport.
      • PAN Card or Form 60 (in case PAN is unavailable).
      • Overseas Citizen of India card, Driving License, or Voter ID.
    2. NRI-Status proof documents
      • Copy of Visa. For many countries in the Middle East, a work permit together with a residence card may be sufficient.
      • Work permit, or residence permit indicating the individual's NRI status.
      • Employment visa or residency permit issued by the government of the host country.
    3. Valid proof of address:
      • Overseas address proof: utility bills, bank account statements, driving license, government-issued ID card, credit card bill, etc.
      • Indian address proof (if available and optional): Aadhar card, voter ID, driving license, bank statement, utility bill, etc.
    4. Other details:
      • Passport size photograph.
      • Initial payment cheque/draft from NRI's foreign bank account for NRE/NRO account or Indian bank account for NRO account.
      • Application for PIS approval (required for stock market investments).

    The documents should be attested either by the authorized officials of overseas branches of banks registered in India or notary public abroad or judge or Indian embassy.

    NRI account online opening process

    • Navigate to the official website of the bank of your choice and look for the page to open an NRE account.
    • Register with basic details: Verify your email address and mobile number.
    • Fill in personal information liker your name, date of birth, nationality and passport details.
    • Enter your addresses in India and abroad.
    • Select account type: Select NRE account.
    • Upload required proof of identity and NRI status proof.
    • KYC verification: Schedule a video call with a bank representative if this option is available.
    • Make the initial deposit as required.
    • Once all steps are completed, your NRE account will be activated and ready to use.

     

  5. NRE account is a rupee-denominated account.

    An NRE account cannot hold foreign currency but an NRI can transfer foreign currency to an NRE account that gets converted in Indian rupees and then deposited in the NRE account.

     

  6. Yes, an NRE (Non-Resident External) account can be used to invest in mutual funds in India.

    Investments in mutual funds do not require a PIS approval thus an NRI can use either NRE or NRO account for mutual fund investments. The key difference between usage of NRE and NRO accounts is that the funds in NRE account can be repatriated easily while funds in NRO account cannot be easily repatriated and is subject to restrictions.

    NRIs can invest in mutual funds either by themselves or through a power of attorney where another person can invest on behalf of the NRI. Refer NRI Investment in Mutual Funds for more details.

     

  7. An NRE (Non-Resident External) account is specifically designed for NRIs to manage their foreign income. Thus, NRE accounts are expected to receive only foreign currency which gets converted into Indian Rupees (INR) when deposited.

    To receive money from India, there exist NRO accounts designed to manage income earned in India (such as income, rent, or local transfers). Till 2012, transfer from NRO to NRE account was not permitted. However, in May 2012, RBI permitted transfers from NRO to NRE subject to certain conditions.

     

  8. An NRE account can be opened online or offline.

    NRE account opening procedure:

    1. Select a Bank that offers NRI banking services such as ICICI Direct, HDFC, Kotak Securities, etc.
    2. Obtain the NRI account opening form from the bank’s website or branch.
    3. Fill Out the Account Opening Form
    4. Gather Required Documents: Personal Details, Identity Proof, Address Proof, and NRI-Status Proof documents.
    5. Submit the Documents
    6. KYC (Know Your Customer) Verification
    7. Make an initial deposit to activate the account
    8. Once the account is approved, receive the account details, cheque book, debit card, and Internet banking credentials.

    In online account opening, the account opening form can be downloaded from the bank website and all information and documents can be submitted online. The KYC verification can also be performed virtually through video call.

     

  9. An NRO bank account in India can be opened online or offline. You need to confirm with the bank providing NRI banking services for the online services.

    The offline account opening would require physical presence of the NRI while online account opening can be done from anywhere.

    Listed below are the generic steps to open NRO bank account:

    1. Visit the official website of the bank where you want to open an NRO account.
    2. Select the option to open an NRO account.
    3. Enter your personal details and contact details of India and overseas.
    4. Save the information to generate a Customer Reference Number (CRN) and make a note of it for future reference.
    5. Verify your email address and mobile number, if required.
    6. Upload the required documents.
    7. Complete the KYC verification via video call.
    8. Once the KYC verification is completed, you will receive an email with your account details.
    9. Make the required initial deposit to activate your account.

    Note: An NRI can also add a nominee to the account. As per regulations only one nominee per account is permitted. The nominee can be a resident or a non-resident.

     

  10. NRE account stands for Non-Resident External account. It is an NRI bank account type designed to manage foreign income. NRO account stands for Non-Resident Ordinary account. It is an NRI bank account to manage income generated in India.

    To know key differences between NRE and NRO, refer to NRE vs NRO.

     

  11. Yes, you can open an NRO (Non-Resident Ordinary) account without having an NRE (Non-Resident External) account.

    An NRI is mandatorily required to open an NRO account as soon as his status becomes NRI. An NRI cannot have a bank account in his name in India. Thus, an NRI is required to convert their existing bank accounts to NRO.

     

  12. Yes, an NRO account can be linked to the demat account.

    If an NRI intends to invest on non-repatriation basis, NRI can link their NRO bank account to demat account to invest in stock markets, mutual funds, IPO, rights issue, F&O etc.

    The demat account linked with NRO account becomes NRI Non-Repatriable Demat account. The sell proceeds of stocks from the linked demat account or any corporate action benefits like dividend due on the shares held in such demat accounts get credited to the linked NRO bank account.

     

  13. Yes, NRO accounts can be opened online with many of the known banks in India such as Axis, HDFC, ICICI, SBI and more.

    In online account opening, NRI can download the form online from the website, upload the scanned copies of attested documents and complete the KYC verification through video call.

     

  14. Yes, an NRO (Non-Resident Ordinary) account can be used for trading.

    Earlier, investment in equity stocks through the secondary market without PIS approval was not permitted. Thus, only an NRO PIS account could be used for trading. Eventually, RBI relaxed the requirement of PIS for NRO route. Thus, now an NRO Non-PIS account can also be used for trading. However, still not all brokers offer the facility to trade using NRO account without PIS, hence confirm with your broker on the option provided.

    NRI can also invest in mutual funds, F&O, NCD, IPO using the NRO account.

     

  15. Yes, an NRO (Non-Resident Ordinary) account can receive money from abroad.

    An NRI can deposit either foreign funds or Indian income in an NRO account. While there are no restrictions on the deposit, the repatriation is subject to certain limits and conditions set by the Reserve Bank of India (RBI). NRIs can repatriate up to USD 1 million per financial year from their NRO account, provided the relevant taxes have been paid.

     

  16. Yes, an NRO (Non-Resident Ordinary) account can receive money from India. The income NRO account can receive:

    • Income Earned in India: This includes income such as rent, dividends, pension, interest, and any other income earned in India.
    • Payments from Resident Indians: Resident Indians can transfer funds to an NRO account for various purposes, such as payment for services, sale proceeds, and gifts.

     

  17. Yes, an NRO (Non-Resident Ordinary) account can send money abroad, but there are specific rules and documentation requirements. Here are the main points:

    1. Annual transfer limit: An NRI may transfer up to USD 1 million per financial year from the balance in the NRO account.
    2. Source of funds: The source of funds in the NRO account determines the amount that can be transferred. The funds generally include income earned in India such as rents, dividends, pensions and interest.
    3. Authorizations required: Transfers from an NRO account need to be approved by the Reserve Bank of India (RBI).
    4. Documentation:
      1. Form 15CA and 15CB: These forms are required for the remittance process. Form 15CA is a declaration of remittance and Form 15CB is a certificate from a chartered accountant certifying the tax compliance of the funds remitted.
      2. Bank Forms: Special forms provided by the bank to process the transfer.
      3. Source of Funds Proof: Documents showing the origin of funds in the NRO account (e.g. rental agreements, dividend statements, etc.).
    5. Passport and visa: copies to verify identity.
    6. Tax returns: Current Indian income tax returns may be required to ensure tax compliance.
    7. Ensure that all applicable taxes on the funds have been paid or deducted at source.

    If you comply with these rules and provide the required documents, NRIs can remit money abroad from their NRO accounts within the specified limits.

     

  18. The NRO account is mainly used for:

    1. Receiving income earned in India such as rental income, income from property or dividends from investments.
    2. Paying expenses: The account can be used to pay for expenses in India, such as utility bills, EMIs, or family maintenance.
    3. Investments: NRIs can use the NRO account to invest in Indian stock markets, mutual funds, F&O and much more.

    Key Features of NRO Account:

    • The account operates in Indian Rupees (INR).
    • Funds can be deposited in Indian or foreign currency (converted to Indian rupees at the time of deposit).
    • Withdrawals from the NRO account are allowed only in Indian Rupees.
    • Repatriation of funds from the NRO account is subject to certain limits and conditions. NRIs can remit up to USD 1 million per financial year after providing necessary documentation and obtaining approvals from the Reserve Bank of India (RBI).

     

  19. NRO Account for Trading Purposes

    An NRO account can be used for trading purposes in India under the Portfolio Investment Scheme (PIS) of the Reserve Bank of India (RBI). Here are the key points:

    • Trading in Indian Markets:: NRIs can use NRO accounts to trade in Indian stock markets. This includes buying and selling stocks, mutual funds, bonds, and other securities.
    • Compliance with PIS: NRIs need to register with a designated bank for Portfolio Investment Scheme (PIS) to invest in the Indian stock market. Transactions under PIS are reported to the RBI.
    • Taxation: Capital gains arising from these trades are subject to tax in India. Short-term and long-term capital gains tax rates will apply depending on the holding period of the securities.
    • Repatriation: Funds from the sale of securities can be repatriated abroad, subject to the overall limit of USD 1 million per financial year after tax compliance.
    • Separate Demat Account: A separate Demat account linked to the NRO account is required for trading purposes. This ensures that the funds used for trading and the investments made are properly tracked and compliant with regulatory requirements.

     

  20. An NRO (Non-Resident Ordinary) account is a bank account in India for Non-Resident Indians (NRIs) to manage their income earned in India. This account is designed to allow NRIs to deposit and manage their Indian earnings such as rent, dividends, pensions, and other incomes earned in India.

    Key Features of NRO Account

    • NRIs can deposit their Indian income sources such as rent, dividends, and pension into this account.
    • Funds in an NRO account can be repatriated outside India, subject to certain limits and conditions. The current limit is up to USD 1 million per financial year, after payment of applicable taxes.
    • An NRO account can be held jointly with another NRI or even with a resident Indian.
    • Interest earned on NRO accounts is subject to tax in India. The applicable rate of Tax Deducted at Source (TDS) on interest income is 30% (plus applicable surcharge and cess).
    • The NRO account is maintained in Indian Rupees (INR).
    • NRO accounts can be in the form of savings accounts, current accounts, recurring deposit accounts, or fixed deposit accounts.
    • NRIs can also transfer funds from NRE account to NRO account or deposit foreign funds in NRO account.

     

  21. An NRO PIS (Portfolio Investment Scheme) account is a special type of bank account for Non-Resident Indians (NRIs) that allows them to invest in the Indian stock market. Under the Portfolio Investment Scheme of the Reserve Bank of India (RBI), NRIs can buy and sell shares and convertible debentures of Indian companies on recognized stock exchanges in India.

    Key Features of NRO PIS Account

    • Enables NRIs to invest in Indian stock exchanges (both primary and secondary markets).
    • Funds from the sale of shares can be repatriated abroad after paying applicable taxes. The overall limit for repatriation from an NRO account is USD 1 million per financial year.
    • All transactions under the PIS need to be reported to the RBI by the designated bank. This ensures regulatory compliance.
    • Earnings from investments are subject to Indian taxes. TDS (Tax Deducted at Source) is applicable on capital gains.
    • A separate NRO PIS account is required for routing the investments. This account helps in clear tracking and reporting of investments and earnings.

    Process of Opening an NRO PIS Account

    • Select a bank authorized by the RBI to offer PIS services.
    • Fill in the application form provided by the bank for opening an NRO PIS account.
    • Submit necessary KYC documents such as passport, visa, proof of address, and PAN card.
    • The bank will obtain the PIS permission from the RBI on behalf of the NRI.
    • Link the NRO PIS account with a trading and Demat account for executing trades.

    Benefits of NRO PIS Account

    • Investments are regulated and compliant with the guidelines set by RBI and SEBI (Securities and Exchange Board of India).
    • Provides a convenient way for NRIs to invest in Indian equities and convertible debentures.
    • Ensures proper tracking and reporting of investments and earnings, simplifying compliance with tax regulations.
    • Allows for repatriation of investment proceeds after tax deductions.

    Note: The requirement of PIS through NRO route is now relaxed by RBI and is not mandatory for trading Indian equity stocks. NRI can trade using their normal NRO accounts provided their broker offers the said facility.

     

  22. The following individuals are eligible to open an NRE account

    1. Non-Resident Indians (NRIs) - (Indian citizens working abroad, business people residing overseas, students studying in foreign countries).
    2. Person of Indian Origin (PIO) - An individual who is not a citizen of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal, or Bhutan and who:
      • At any time held an Indian passport, or
      • Whose parents or grandparents were citizens of India by the Constitution of India or the Citizenship Act, of 1955, or
      • Is a spouse of an Indian citizen or a person referred to in the above clauses.
    3. Overseas Citizen of India (OCI) - Foreign nationals of Indian origin who have obtained OCI status from the Government of India.

     

  23. NRI investors can choose to open an NRO account either online or offline. The NRO account can be PIS enabled or investors can choose to make it a non-PIS account. Investors first need to download the application document from the bank’s website.

    1. Completed application form signed and attested by your banker/Embassy of India/public notary or any person known to the bank and must be accompanied by:
    2. Copy of passport, along with photocopies of address proof, expiry date of passport, etc.
    3. Copy of Visa. For many countries in the Middle East, a work permit may be sufficient, along with a residence card.
    4. One passport photograph of each applicant.
    5. For mailing addresses, the following proofs may be acceptable.
      • Photocopy of Valid Passport stating the overseas address
      • Photocopy of Utility Bill
      • Photocopy of Overseas Bank Statement
      • Photocopy of Valid Driving License
      • Photocopy of Government issued ID Card
      • Photocopy of Credit Card bill
    6. In case an individual cannot come to a branch for the opening of the account then, all photocopies of the above documents need to be attested by an Indian Embassy or Notary or by a Banker overseas.
    7. NRI proof document like – valid work permit/visa
    8. Valid proof of identity: PAN card, driver's license, passport, voter ID, etc.
    9. Valid proof of address: utility bills, bank account statement, rental agreement, etc.
    10. NRI status proof: employment visa or residency permit issued by the government of the host country.
    11. Contact information and details of the applicant’s bank account.
    12. Pan Card (It is mandatory irrespective of residential status.)
    13. Identity Proof (PAN card, Driving license, Voter card, Overseas Citizen of India card).
    14. Overseas Address Proof. (Driving License, Bank Statement, Lease/Rent Agreement. Utility Bill)
    15. Indian Address Proof (Optional for OCI/PIO). (Aadhar Card/Voter ID/Driving License/Bank Statement/Utility bill)
    16. Photograph as per Account Opening Form requirement.
    17. In case the investor does not visit the branch (Non-Face-to-Face Case) to open these accounts then all photocopies should be attested by the customer himself and to be attested by the Indian Embassy or by Notary or By Banker Overseas. (This will apply to all the documents)
    18. The account opening form and the above documents are mandatory to open PIS, Trading, and Demat Accounts.
    19. In the case of a Foreign Passport, it needs to be accompanied by an OCI/PIO Card with a matching passport number.
    20. PIS permission letter from the bank (issued by RBI).

     

  24. NRI investors have a lot of options to invest in India. These include:

    • Derivatives, Futures & Options
    • Bonds
    • Stocks i.e. equity shares investment
    • Mutual Funds.

    Investments for NRIs are almost the same as residents subject to norms.

     

  25. All non-resident Indians are eligible for NRI account creation. This is subject to the norms as mentioned by the authorities and changes as suggested by them. The following criteria have to be met:

    • An individual who is employed or owns a business or practices some form of business outside India for more than 182 days
    • Indian government employees who hold diplomatic passports
    • Students studying abroad
    • Seafarers
    • Indian employees of an oil rig situated in a foreign country staying outside India for more than 182 days

     

  26. The documents for opening an NRI trading account and a demat account are the same. The most important documents that NRI investors should have ready for opening a trading account are:

    • The PIS Permission Letter from the respective designated bank for trading on a repatriation
    • The PIS FEMA NRE/NRO bank accounts cancelled the cheque.
    • PAN Card.
    • Overseas Address Proof - Driving License/ Foreign passport /Utility Bills/Bank statement (not more than 2 months old)/Notarized copy of rent agreement/ leave & license agreement/ Sale deed.
    • Photograph of Investor.
    • Proof of respective bank accounts & depository accounts.
    • Account opening fee check + Demat Account Opening Fee check.
    • Duly signed account opening forms.

    NRI investors must additionally keep the following important considerations in mind:

    Indian Passport Holders

    Foreign Passport Holders

    Birth Certificate

    Copy of PIO / OCI Card

    Valid Passport

    Birth Certificate

    Valid Visa

    		  

     

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