BASIC DEFINITIONS

WHO IS A NON RESIDENT(NRI)?

NRI is an individual who is a citizen of India but resident outside India or Person of
Indian Origin (PIO)
FEMA defines a Resident and states that a person who is not a Resident is a Non
Resident.
A person is not a resident in India if:
(a) Their stay in India is for 182 or lesser number of days.
(b) Their stay outside India is for taking up employment or carrying on business or for
any other purpose with intention to stay outside India for uncertain period.

PERSON RESIDENT IN INDIA

is defined as:
A person residing in India for more than 182 days during the course of the preceding
financial year but does not include-
●A person who has gone out of India or who stays outside India, in either case:
 For on taking up employment outside India, or
 For carrying on outside India a business or vocation outside India, or
 For any other purpose, in such circumstances as would indicate his intention to
stay outside India for an uncertain period

●A person who has come to or stays in India, in either case, otherwise than
 For or on taking up employment in India, or
 For carrying on in India a business or vocation in India, or
 For any other purpose, in such circumstances as would indicate his intention to
stay in India for an uncertain period;

WHO IS A PERSSON OF INDIAN ORIGIN?

A citizen of any country other than Bangladesh or Pakistan if:
■he/she at any time held an Indian passport
■either of his/her parents or grandparents were citizens of India
■the person is a spouse of an Indian resident or PIO

WHO IS NON RESIDENT INDIAN MARINER?

An Indian citizen employed on a foreign vessel and who intends to be away for more
than 6 months in a year.

STUDENT NRI?
A student studying overseas is now also considered at par with any other NRI.

FOREIGN EXCHANGE MANAGEMENT (DEPOSIT) REGULATIONS, 2000.

In these regulations-
(a) ‘Act’ means the Foreign Exchange Management Act,1999;
(b) ‘Authorized bank’ means a bank including a co-operative bank(other than an
authorized dealer) authorized by the Reserve Bank to maintain an account of a
person resident outside India;
(c) ‘Deposit’ includes deposit of money with a bank,company,proprietary
concern, partnership firm, corporate body,trust,or any other person;
 Standard Chartered offers the following accounts for Non-Residents:-

Types of Non-
Resident Accounts

Foreign Currency
Non-Resident Non-Resident Non-Resident
(Bank) Account External Account Ordinary account
FCNR(B) (NRE) (NRO)

 FOREIGN CURRENCY(Non-Resident)
FCNR account means Foreign Currency Non-Resident (Bank) account.

1. Eligibility
(a) NRIs are eligible to open and maintain these accounts with a bank.
NOTE: Opening of FCNR (B) accounts in the name of NRIs of Bangladesh/Pakistan
nationality/ownership requires approval of Reserve Bank.
NOTE: Only the NR customer can open the account. The holder of power of attorney
cannot open the account.

(b) These accounts may be opened with funds remitted from outside India through
normal banking channels or funds received in rupees by debit to the account of a non-
resident bank maintained with a bank in India or funds which are of repatriable nature
in terms of the regulations made by Reserve Bank. Accounts may be opened by
transfer of funds from existing NRE/FCNR accounts

(c)Remittances from outside India for opening of or crediting these accounts should
me made in the designated currency[these are 5 designated currencies: US
Dollar(USD), Pound Sterling(GBP), Euro, Australian Dollar(AUD) & Canadian
dollar(CAD)] in which the account is desired to be opened/maintained. Without
prejudice to this, if the remittance is received in a currency other than the designated
currency( including funds received in rupees by debit to the account of a non-resident
bank), it should be converted into latter currency by the authorized dealer( includes
banks) at the risk and cost of the remitter and account should be opened/credited in
only the designated currency.

(d)In case the depositor with any convertible currency other than the designated
currency desires to place a deposit in these accounts, authorized dealers may
undertake with the depositor a fully covered swap in that currency against the desired
designated currency. Such a swap may also be done between two designated
currencies.

2. Type of account
The accounts may be opened only in the form of term deposit with maturity of such
period as may be specified by the Reserve Bank from time to time .Currently the
period is minimum of 1year and maximum of 5years.

3. Rate of interest
The rate of interest on funds held in these deposit accounts will be in accordance with
the directives issued by the Reserve Bank from time to time. Currently it is LIBOR
plus 100 Basis points.

4. Permissible Debits/Credits
All debits/credits permissible in respect of NRE accounts as specified in Schedule 1
shall be permissible in respect of these accounts also.

5. Manner of Payment of Interest

(a)Interest on FCNR (B) deposits should be paid on the basis of 360 days to a year.
Interest on balances held in these accounts may be paid half-yearly or on an annual
basis as desired by the depositor. For interest upon a year, the interest will be paid
without any compounding effect. In respect of deposits of more than 1 year, interest
can be paid at intervals of 180 days each and thereafter for remaining actual number
of days. However, depositor will have the option to receive the interest on maturity
with compounding effect in case of deposits of more than a year.

(b)Interest may be credited to a new FCNR (B) account or an existing/new NRE/NRO

in the name of the account holder, at his option.

6. Change of resident status of the account holder

When an account holder becomes a person resident in India, deposits may be allowed
to continue till maturity at the concerned rate of interest, if so desired by him.
However, except the provisions relating to rate of interest and reserve requirements
as applicable to FCNR(B) deposits, for all other purposes such deposits shall be
treated as resident deposits from the date of return of the account holder to India.
Bank converts the FCNR(B) deposits on maturity into resident rupee deposit accounts
or RFC account(if the depositor is eligible to open RFC account), at the option of the
account holder and interest on the new deposit (rupee account or RFC account) shall
be payable at the relevant rates applicable for such deposits. Conversion of FCNR(B)
deposit to NRE deposit or vice versa before maturity shall attract penalty related to
premature withdrawal.

10. (a) Joint account, repatriation of balances, etc.- Terms and conditions as
applicable to NRE accounts in respect of joint accounts, repatriation of funds,
opening account during temporary visit, operation by power of attorney, loans/
overdrafts against security of funds held in accounts, shall apply mutatis mutandis to
FCNR(B) accounts.
(b) Bank may permit remittance of the maturity proceeds of FCNR(B) deposits to
third parties outside India, provided the transaction is specifically authorized by the
account holder and the bank is satisfied about the bonafide of the transaction..

 NRE account
NRE account means a Non Resident External account
NOTE: The account should be opened by the non-resident account holder himself and
not by the holder of power of attorney in India..
NOTE: Opening of NRE accounts in the name of individuals / entities of Bangladesh /
Pakistan nationality / ownership requires the approval of Reserve Bank.
NOTE: No lien can be placed over an NRE SA Accounts.

Permitted Credits
 Proceeds of remittances to India in any permitted currency.
 Proceeds of personal cheques drawn by the account holder on his foreign
currency account and traveller’ s cheque, bank drafts payable in any
permitted currency, deposited by the account holder in person during his
temporary visit to India, provided the authorized dealer (bank) is satisfied
that the account holder is still resident outside India, the traveler’s
cheques / drafts are standing / endorsed in the name of the account holder
and in the case of traveller’s cheques, they were issued outside India.
 Proceeds of foreign currency / bank notes tendered by account holder
during his temporary visit to India, provided (a) the amount was declared
on a Currency Declaration Form (CDF), where applicable, and (b) the
notes are tendered to the bank in person by the account holder himself and
the bank is satisfied that account holder is a person resident outside India.
 Transfers from other NRE/ FCNR accounts.
 Interest accruing on the funds held in the account.
 Interest on Government securities and dividend on units of mutual funds,
provided the securities were purchased by debit to the account holder’s
NRE/ FCNR account or out of inward remittance through normal banking
channels.
 Maturity proceeds of Government securities and sale proceeds of units
received from mutual funds provided the securities were purchased by
debit to the account holder’s NRE/ FCNR account or out of remittances
received from outside India in free foreign exchange.
 Refund of share / debenture subscriptions to new issues of Indian
companies , if the amount of subscription was paidfrom the same account
or from other NRE / FCNR account of the account holder’s or by
remittances from outside India through normal banking channels.
 Any other credit if covered under general or special permission granted by
Reserve Bank.

Permitted Debits

 Local disbursements
 Remittances outside India
  Transfer to NRE/ FCNR accounts of the account holder or any other
person eligible to maintain such account
 Investment in shares / securities / commercial paper of Indian company or
for purchase of immovable property in India provided such investment /
purchase is covered by the regulations by the Reserve Bank.

Rate of Interest
Rate applicable to these accounts shall be in accordance with the directions issued by
Reserve Bank.

Change of resident status of account holder

NRE accounts should be re-designated as resident accounts or the funds held in these
accounts may be transferred to the RFC accounts (if the account holder is eligible for
maintaining RFC account) at the option of account holder immediately after the return
of account holder to India for taking up employment or for carrying on business or for
any other purpose indicating intention to stay in India for an uncertain period. Where
the account holder is only on a short visit to India, the account may continue to be
treated as NRE account even during his stay in India.

Repatriation of funds to non-resident nominee

SCB may allow remittance of funds lying in the NRE account of the deceased account
holder to his non-resident nominee.

Joint accounts