Status of NRI bank accounts when they return to India
After NRI returns to India what happens to their NRI bank accounts?
NRIs when they return to India for permanent settlement can continue to hold assets abroad. However, bank accounts in India such as NRO, NRE and FCNR must be designated into resident accounts. Even though returning NRI accounts such as NRE etc. are required to be closed, they can still continue to hold foreign currency accounts in India by opening new bank account. Read on . . .How your NRI accounts are effected on returning to India
Here is an overview of what happens to your NRI accounts on return to India. NRO account will be converted back to resident saving account. NRE and FCNR account may be converted to Resident Foreign Currency account (RFC) Kindly be aware that it is the returning NRIs responsibility to notify their financial institutions where their accounts are held, of the change in their residential status. Fixed / Term deposit NRI bank accounts Returning NRIs can continue to hold their fixed deposit accounts such as FCNR until maturity. After maturity, NRE and FCNR fixed deposit account should be converted to RFC account. If NRI account holder qualifies for Resident but not Ordinarily Resident status (RNOR) then the interest earned on RFC account is also tax free for another 2 years. RNOR status applies to those who have stayed abroad for 9 years in previous 10 years.Bank Accounts in India where Indian Residents can keep foreign currency
Non Resident Indians ( NRI) who return to India and have foreign exchange that they wish to keep without converting their funds to Indian rupees can do so by opening a Resident Foreign Currency (RFC) account in India. NRIs returning to India after residing abroad for a continuous period of at least one year can open RFC accounts at most banks in India. Generally there are four major currencies in which an RFC account can be maintained. These currencies are US$, EUR, GBP and Japanese Yen. RFC account can be opened as a savings account or a term/fixed deposit account. Quarterly interest is paid on such accounts but is taxable unless the account holder qualifies for RNOR status. [Kindly note: No interest is payable on RFC (Domestic) account] You can use RFC funds for any remittances or investment abroad; you can also use the funds for maintenance of dependents or any personal purposes abroad In the event a RFC account holder decides to go abroad, they can transfer the RFC account funds abroad or move them to a new NRE or FCNR account.Types of deposits in RFC accounts
RFC accounts can be used to hold foreign exchange brought in by NRI or periodically transfer funds from abroad to India. Deposit any foreign income an NRI may receive Deposit foreign pensions etc. Kindly note that there are two types of RFC accounts one is for returning NRIs and the other is for resident Indians.RFC - Domestic Account for Resident Indians
The Reserve Bank of India allows easy access to foreign currency to Indian residents through foreign currency account (domestic) bank accounts that can be opened by resident Indians in four major currencies such as US$, EUR, GBP and Japanese Yen. RFC account can be opened in your choice of currency. Only one currency is allowed per account. However, in case an account holder wants to keep more than one currency, for example US$ and EUR, then they can open two separate accounts. Protects against currency fluctuations and paying commissions to exchange currency when you require foreign exchange No minimum balance requirement Foreign currency withdrawals can be possible in the form of cash, traveler's cheque, foreign currency DD. Withdrawal limit will be as per RBI guidelines. [withdrawal in currency notes is generally limited to around US$ 3000] The drawback is that domestic RFC accounts pay no interest
Disclaimer: Information provided is for general knowledge only and should not be deemed to be professional advice. For professional advice kindly consult a professional
accountant, immigration advisor or the Indian consulate. Rules and regulations do change from time to time. Please note that in case of any variation between what has
been stated on this website and the relevant Act, Rules, Regulations, Policy Statements etc. the latter shall prevail.
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Status of NRI bank accounts
when they return to India
After NRI returns to India what
happens to their NRI bank
accounts?
NRIs when they return to India for permanent settlement can continue to hold assets abroad. However, bank accounts in India such as NRO, NRE and FCNR must be designated into resident accounts. Even though returning NRI accounts such as NRE etc. are required to be closed, they can still continue to hold foreign currency accounts in India by opening new bank account. Read on . . .How your NRI accounts are effected
on returning to India
Here is an overview of what happens to your NRI accounts on return to India. NRO account will be converted back to resident saving account. NRE and FCNR account may be converted to Resident Foreign Currency account (RFC) Kindly be aware that it is the returning NRIs responsibility to notify their financial institutions where their accounts are held, of the change in their residential status. Fixed / Term deposit NRI bank accounts Returning NRIs can continue to hold their fixed deposit accounts such as FCNR until maturity. After maturity, NRE and FCNR fixed deposit account should be converted to RFC account. If NRI account holder qualifies for Resident but not Ordinarily Resident status (RNOR) then the interest earned on RFC account is also tax free for another 2 years. RNOR status applies to those who have stayed abroad for 9 years in previous 10 years.Bank Accounts in India where
Indian Residents can keep foreign
currency
Non Resident Indians ( NRI) who return to India and have foreign exchange that they wish to keep without converting their funds to Indian rupees can do so by opening a Resident Foreign Currency (RFC) account in India. NRIs returning to India after residing abroad for a continuous period of at least one year can open RFC accounts at most banks in India. Generally there are four major currencies in which an RFC account can be maintained. These currencies are US$, EUR, GBP and Japanese Yen. RFC account can be opened as a savings account or a term/fixed deposit account. Quarterly interest is paid on such accounts but is taxable unless the account holder qualifies for RNOR status. [Kindly note: No interest is payable on RFC (Domestic) account] You can use RFC funds for any remittances or investment abroad; you can also use the funds for maintenance of dependents or any personal purposes abroad In the event a RFC account holder decides to go abroad, they can transfer the RFC account funds abroad or move them to a new NRE or FCNR account.Types of deposits in RFC accounts
RFC accounts can be used to hold foreign exchange brought in by NRI or periodically transfer funds from abroad to India. Deposit any foreign income an NRI may receive Deposit foreign pensions etc. Kindly note that there are two types of RFC accounts one is for returning NRIs and the other is for resident Indians.RFC - Domestic Account for Resident
Indians
The Reserve Bank of India allows easy access to foreign currency to Indian residents through foreign currency account (domestic) bank accounts that can be opened by resident Indians in four major currencies such as US$, EUR, GBP and Japanese Yen. RFC account can be opened in your choice of currency. Only one currency is allowed per account. However, in case an account holder wants to keep more than one currency, for example US$ and EUR, then they can open two separate accounts. Protects against currency fluctuations and paying commissions to exchange currency when you require foreign exchange No minimum balance requirement Foreign currency withdrawals can be possible in the form of cash, traveler's cheque, foreign currency DD. Withdrawal limit will be as per RBI guidelines. [withdrawal in currency notes is generally limited to around US$ 3000] The drawback is that domestic RFC accounts pay no interest
