NRI Bank Accounts in India: NRO, NRE, FCNR(B) Complete Exam Guide
NRI Bank Accounts in India: NRO, NRE, FCNR(B) — Complete Exam Guide
⚡ Quick Facts — NRI Accounts
| Governing law | Foreign Exchange Management Act (FEMA), 1999 — RBI Master Directions |
| NRO currency | Indian Rupee (INR) |
| NRE currency | Indian Rupee (INR) |
| FCNR(B) currency | Foreign currency (USD, GBP, EUR, CAD, JPY, AUD, etc.) |
| FCNR(B) type | Fixed Deposit only — minimum 1 year, maximum 5 years |
| NRO repatriation | Up to USD 1 million per financial year (all NRO accounts combined) |
| NRE repatriation | Freely repatriable — no limit |
| FCNR(B) repatriation | Freely repatriable — no limit |
| NRO interest taxation | Taxable in India — TDS at 30% + surcharge + cess (DTAA benefit available) |
| NRE interest taxation | Tax-free in India |
| FCNR(B) interest taxation | Tax-free in India |
| Resident joint holder | NRO: Yes (any basis) · NRE / FCNR(B): Yes, on former or survivor basis only |
NRI banking is a regularly tested topic at Scale II and above — typically 3–5 marks. MCQs focus on the NRO vs NRE vs FCNR(B) comparison, repatriation limits, taxation, and joint account rules. Know the three-account comparison table cold.
Who is an NRI?
Under FEMA, 1999, a Non-Resident Indian (NRI) is a person resident outside India who is a citizen of India. An NRI must stay outside India for more than 182 days in a financial year for tax purposes (Income Tax Act), but for FEMA/banking purposes, the key criterion is being a “person resident outside India” — i.e., having gone abroad for employment, business, vocation, or for any other purpose indicating an intention to stay outside India for an uncertain period.
OCI (Overseas Citizen of India) card holders are treated at par with NRIs for most banking and FEMA purposes.
Three Main NRI Account Types
1. Non-Resident Ordinary Rupee Account (NRO)
Designed for income earned in India — rental income, pension, dividends, interest from Indian investments.
- Currency: Indian Rupees (INR)
- Account types: Savings, Current, Recurring Deposit, Fixed Deposit
- Funds deposited: Income earned in India + remittances from abroad
- Repatriation: Restricted — up to USD 1 million per financial year (April–March), net of taxes, for all NRO accounts combined; requires Form 15CA/15CB
- Taxation: Interest income is taxable in India; TDS at 30% + surcharge + cess (DTAA benefit may reduce this)
- Joint holder: Resident Indian can be a joint holder (on any basis)
2. Non-Resident (External) Rupee Account (NRE)
Designed for income earned abroad — foreign earnings parked in India in rupee form.
- Currency: Indian Rupees (INR) — deposits converted from foreign currency
- Account types: Savings, Current, Recurring Deposit, Fixed Deposit
- Funds deposited: Only remittances from abroad (foreign earnings); cannot deposit income earned in India
- Repatriation: Freely repatriable — both principal and interest, without limit
- Taxation: Interest income is fully exempt from tax in India
- Joint holder: Resident Indian can be joint holder on former or survivor basis only
3. Foreign Currency Non-Resident (Bank) Account — FCNR(B)
Designed for NRIs who want to hold deposits in foreign currency — eliminating exchange rate risk.
- Currency: Foreign currency — USD, GBP, EUR, CAD, JPY, AUD, CHF, SGD, HKD, SEK, DKK, NOK
- Account types: Fixed Deposit only — minimum 1 year, maximum 5 years
- Funds deposited: Only remittances from abroad (foreign earnings)
- Repatriation: Freely repatriable — both principal and interest, without limit
- Taxation: Interest income is fully exempt from tax in India
- Joint holder: Resident Indian can be joint holder on former or survivor basis only
NRO vs NRE vs FCNR(B) — Master Comparison Table
| Feature | NRO | NRE | FCNR(B) |
|---|---|---|---|
| Full form | Non-Resident Ordinary Rupee | Non-Resident (External) Rupee | Foreign Currency Non-Resident (Bank) |
| Currency | INR | INR | Foreign currency |
| Account types | SB, CA, RD, FD | SB, CA, RD, FD | FD only |
| FD tenure | As per bank | As per bank | 1–5 years |
| Source of funds | Income earned in India + abroad remittances | Remittances from abroad only | Remittances from abroad only |
| Repatriation (principal) | Up to USD 1 million/year | Freely repatriable | Freely repatriable |
| Repatriation (interest) | Up to USD 1 million/year (within limit) | Freely repatriable | Freely repatriable |
| Interest taxation | Taxable (TDS 30%) | Tax-free | Tax-free |
| Exchange rate risk | Yes (INR account) | Yes (INR account) | No (foreign currency) |
| Resident joint holder | Yes (any basis) | Yes (former or survivor only) | Yes (former or survivor only) |
| NRI-to-NRI joint | Yes | Yes | Yes |
| Loan against account | Yes | Yes (in India only) | Yes (in India only) |
| Nomination | Available | Available | Available |
Repatriation Rules
| Account | Repatriation Limit | Documentation Required |
|---|---|---|
| NRE | No limit — fully free | No special documentation needed |
| FCNR(B) | No limit — fully free | No special documentation needed |
| NRO (current income) | Freely repatriable | Form 15CA (self-declaration) |
| NRO (capital/balance) | Up to USD 1 million per financial year (all NRO accounts) | Form 15CA + Form 15CB (CA certificate) |
NRO → NRE transfer: Permitted — but counts against the USD 1 million annual NRO repatriation limit.
NRE → NRO transfer: Permitted freely — no restriction.
Two Other NRI Account Types
Special Non-Resident Rupee Account (SNRR)
- Opened by persons resident outside India for specific business transactions in India
- Maintained in INR; funds related to specific permitted transactions
- Not a general-purpose deposit account; no interest paid
Resident Foreign Currency (RFC) Account
- Opened by a returning NRI (who has come back to India and become resident)
- Can hold foreign currency assets accumulated while abroad
- Maintained in foreign currency; freely repatriable
- Available as savings, current, or fixed deposit
- Interest is taxable once the account holder becomes ordinarily resident
What Happens to NRI Accounts When the NRI Returns to India?
| Account | On Return to India (Becoming Resident) |
|---|---|
| NRO account | Redesignated as a resident rupee account |
| NRE account | Redesignated as a resident rupee account OR converted to RFC account |
| FCNR(B) account | May continue till maturity; on maturity converted to RFC account or resident rupee account |
Practice NRI Accounts MCQs
NRO vs NRE vs FCNR(B) comparisons, repatriation limits, taxation, and joint holder rules are regularly tested at Scale II–III. Our course has 15+ MCQs with detailed explanations.
View Course Details →One-Liners for Quick Revision
- NRI accounts governed by FEMA, 1999 and RBI Master Directions.
- Three main NRI accounts: NRO (Ordinary), NRE (External), FCNR(B) (Foreign Currency).
- NRO and NRE are maintained in INR; FCNR(B) in foreign currency.
- FCNR(B) is a Fixed Deposit only — minimum 1 year, maximum 5 years.
- NRO: income earned in India + abroad remittances. NRE and FCNR(B): foreign earnings only.
- NRO repatriation: up to USD 1 million per financial year (net of taxes).
- NRE and FCNR(B): freely repatriable — no limit on principal or interest.
- NRO interest: taxable — TDS at 30% (DTAA may reduce). NRE and FCNR(B) interest: tax-free in India.
- NRO → NRE transfer: permitted but within the USD 1 million annual NRO repatriation limit.
- Resident Indian as joint holder in NRO: any basis. In NRE/FCNR(B): former or survivor only.
- Form 15CA (self-declaration) + Form 15CB (CA certificate) required for NRO capital repatriation.
- FCNR(B) currencies include: USD, GBP, EUR, CAD, JPY, AUD, CHF, SGD, HKD and others.
- RFC (Resident Foreign Currency) account: for NRIs returning to India — holds prior foreign currency assets.
- On return to India: NRE/FCNR(B) accounts converted to RFC or resident rupee accounts.
- OCI card holders are treated at par with NRIs for banking/FEMA purposes.
- SNRR account: for specific permitted business transactions — no interest, not a general deposit account.
Frequently Asked Questions
What is the difference between NRO, NRE, and FCNR(B) accounts?
NRO (Non-Resident Ordinary): held in INR; accepts both Indian-earned income and foreign remittances; partially repatriable (up to USD 1 million/year); interest is taxable. NRE (Non-Resident External): held in INR; accepts only foreign remittances; fully repatriable; interest is tax-free. FCNR(B) (Foreign Currency Non-Resident): held in foreign currency (USD, GBP, EUR, etc.); fixed deposits only (1–5 years); accepts only foreign remittances; fully repatriable; interest is tax-free. The key distinctions are currency, source of funds, repatriation freedom, and taxation.
How much can an NRI repatriate from an NRO account?
An NRI can repatriate up to USD 1 million per financial year (April to March) from NRO accounts, net of applicable taxes, combining all NRO accounts held in India. Current income (like rent or interest) from NRO accounts is freely repatriable without this limit. Repatriation of capital/balance requires Form 15CA (self-declaration) and Form 15CB (certificate from a Chartered Accountant). Transfers from NRO to NRE accounts also count within this USD 1 million limit.
Can a resident Indian be a joint holder in an NRE or FCNR(B) account?
Yes, but only on a “former or survivor” basis — the NRI must be the first-named (former) holder and the resident Indian is the second (survivor) holder. The resident Indian can operate the account only in the event of the NRI’s death. In an NRO account, a resident Indian can be a joint holder on any basis (either or survivor, jointly, etc.) without this restriction.
Is interest on NRE and FCNR(B) accounts taxable in India?
No. Interest earned on both NRE and FCNR(B) accounts is completely exempt from income tax in India as long as the account holder maintains NRI status. Interest on NRO accounts, however, is fully taxable in India — TDS is deducted at 30% plus applicable surcharge and cess. NRIs from countries that have a Double Taxation Avoidance Agreement (DTAA) with India may claim a reduced TDS rate under the treaty.
What happens to NRE and FCNR(B) accounts when the NRI returns to India permanently?
When an NRI returns to India and becomes a resident, NRE accounts must be redesignated as resident rupee accounts or converted to RFC (Resident Foreign Currency) accounts. FCNR(B) accounts may continue until maturity — on maturity, they are converted to RFC accounts or resident rupee accounts at the holder’s option. RFC accounts allow the returning NRI to continue holding foreign currency assets in India; the interest remains tax-free until the account holder becomes “ordinarily resident.”
What types of accounts can be opened under NRE and NRO? Can FCNR(B) be a savings account?
NRE and NRO accounts can be opened as Savings, Current, Recurring Deposit, or Fixed Deposit accounts. FCNR(B) can only be a Fixed Deposit — it is not available as a savings or current account. The minimum tenure for FCNR(B) fixed deposits is 1 year and the maximum is 5 years. This is a common exam trap — students sometimes confuse FCNR(B) with a savings account.