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Today, there a number of Indians working abroad. Therefore, the banking services catering tothe transfer of funds, savings, earnings, investments, and repatriation of Non-Resident Indianshave grown tremendously.

Banking laws for NRIs allow for the following deposit schemes, or simply put, accounts withauthorized dealers -- banks and financial institutions authorized by Reserve Bank of India to deal

in foreign exchange -- to be maintained in Indian rupees and in foreign currency:

FCNR-- Foreign Currency Non-Resident Account

NRE -- Non-Resident External Rupee Account

NRO -- Non-Resident Ordinary Rupee Account

The special features for the above mentioned accounts are:

FCNR Accounts

These accounts are only for term (fixed) deposits with the maturity ranging from one year to

three years.

NRE Accounts

NRE accounts are opened in Indian rupees and all foreign exchange deposits received for creditof these accounts are first converted to Indian rupees at the buying rates by the banks.

NRO Accounts

A bank account, held by a person designated as NRI, in India is designated as an Ordinary Non-

resident Account (NRO Account).

FCNR Accounts NRE Accounts NRO AccountsCurrency used:

Pounds Sterling

US Dollars

Japanese Yen

Euro

Features:

Accounts only

for termdepositsranging from

Currency used:

Indian rupees (all foreignexchange deposits receivedneed to be first converted toIndian rupees at the buying ratesby the banks)

Features:

Withdrawals in foreign

currency are permittedprovided The Indianrupees in the accountare converted to foreigncurrency at the selling

Currency used:

Indian rupees

Features:

Accounts can also be

opened with fundsdeposited from abroad.

As funds in this type of

account are non-repatriate, they cannot bedeposited abroad to theaccount holders ortransferred to their NRE

Accounts without the

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one year tothree years.

Principal, as

well as interest,earned onthese accounts

is transferableoutside India inthe samecurrency or inotherconvertiblecurrency.

The interest,

earned onthese deposits,is exempt fromIndian Income

Tax.

rate. This conversionloss is to be borne by theaccount holder.

Deposits and their

interests are free ofIndian Income-tax.

The entire credit balance

(inclusive of interestearned accumulated)can be repatriated (sendback) outside India atany time withoutrequiring permissionfrom the RBI.

Local disbursement from

the accounts can bemade freely.

Account holders can

avail of loans/overdraftsfrom banks againstsecurity of fixed depositsin their NRE accounts.

The balances in the

accounts are free ofWealth-tax and gifts toclose relatives in Indiaare free of any Gift-tax.

Reserve Bank's priorpermission.

Interest earned on these

deposits is not exempt

from Indian Income-tax.

Some important facts that you should know about such accounts:

NRI accounts cannot be opened/ operated by a Power-of-Attorney holder in India

on behalf of the NRI: However, the latter can operate the accounts for the purpose oflocal payments to be made on behalf of the NRI account holder. The Power-of-Attorney

holder is not permitted to make gifts from these accounts and is not allowed to make

remittances outside India.

NRIs can invest in shares and securities of Indian companies, government securities,

etc. NRIs can invest in units of domestic mutual funds and deposits with Indian

companies, immovable properties in India, and proprietorship/ partnership concerns in

India.

These investments can be done using a NRO or NRE account. However, an importantpoint to remember is that if you use an NRO account, the funds sourced from any

investments cannot be repatriated. This problem is solved by using a NRE account.