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Information for NRIs


An Indian citizen or a foreign citizen of Indian origin who stays abroad for employment/carrying on business or vocation or under circumstances indicating an intention for an uncertain duration of stay abroad is a NON-RESIDENT INDIAN ( NRI ). ( Those who stay abroad on business visit, medical treatment, study or such other purposes which do not indicate an intention to stay there for an indefinite period will not be considered as NRIs ).


For the purposes of availing of the facilities of opening and maintenance of bank accounts , a foreign citizen (but not a citizen of Pakistan or Bangladesh) is deemed to be of Indian Origin, if he, at any time was an Indian citizen or either of his parents or any of his grandparents was a citizen of India. A spouse (not being a citizen of Pakistan or Bangladesh) of an NRI is also treated as an NRI for the above purposes. For investments in shares/securities in India, a foreign citizen (but not a citizen of Pakistan, Bangladesh or Sri Lanka) is deemed to be of Indian Origin, subject to satisfaction of the other conditions above. For investments in immovable properties, a foreign citizen (but not a citizen of Pakistan, Bangladesh, Afghanistan, Bhutan, Nepal or Sri Lanka) is deemed to be of Indian Origin, if he, at any time, was an Indian citizen or his father or paternal grandfather was an Indian citizen.


Status of NRIs Returning to India

Status of non-residents on temporary visits/stay in India

  • if visit/stay in India is without any intention to stay in India for an uncertain period, shall continue to be treated as `non-residents' during their stay in India.
  • Will continue to get all the benefits/advantages that are available to non-residents. Non-resident accounts/investments etc. would continue without any change
  • Will not be required to surrender foreign exchange available with them.

 Status of Bank accounts on return to India

Change of Status

When NRIs return with the intention to reside for uncertain period their accounts will be designated as Resident accounts. The funds in their NRE and FCNR accounts may be also converted into US$ and placed in Resident Foreign Currency (RFC) accounts.

Ordinary Non-Resident Accounts

  • Ordinary non-resident accounts will be converted as resident accounts by banks in India
  • Operations on accounts of foreign nationals will be subject to QA 22 provisions.

Non-resident (External) Rupee Accounts

  • Will be converted as resident rupee accounts or RFC accounts (if eligible) at the option of the account holder.
  • In case of NR(E) fixed deposits, the accounts will continue to earn agreed higher rates of interest till maturity even after their being converted to resident account.

 FCNR Accounts

  • Will be converted as resident rupee account or Resident Foreign Currency (RFC) account (if eligible) at the option of the account holder.
  • Where the account is converted to resident rupee account, the foreign currency amount will be converted to Indian rupees at TT buying rate ruling on the day of conversion.
  • Interest on the new deposit would be payable at the relevant rate applicable for such deposit.
  • Where the amount is transferred to RFC account, the rate of interest applicable to RFC deposit will be payable.

Non-Resident Non-Repatriable Rupee Deposit Scheme

  • Will be converted to resident accounts
  • Higher rate of interest as per the original contracted rate would continue to be payable till the maturity of the deposit.


The provisions relating to assets of returning Indians are governed by FEMA, 1999 as:

Movable Assets Abroad: Foreign exchange/Overseas assets such as  Bank accounts, stocks and securities, Life insurance policies, Loans, company deposits, debentures, bonds etc., acquired, held or owned by NRI while he was abroad can be continued to be so held and owned evenafter the NRI returns to India for permanent settlement. Such investments can accumulate/accrue income outside India. Such balances can be utilised for reinvestment and can be repatriated to India at any time.
Immovable Assets Abroad: NRIs can continue to hold their immovable properties outside India, such properties can be rented out, rentals can be credited to overseas bank accounts. Such properties can be sold/transferred and the sale proceeds credited to overseas bank accounts. Expenses relating to such properties, such as maintenance, insurance premium etc. can be paid out of the overseas balances.
Bank accounts in India: Immediately on return to India, NRIs should inform their Bankers and the Bankers will designate their accounts as Resident accounts or transfer the balance in their NRE/FCNR accounts to RFC accounts if so desired. FCNR accounts can be continued till the date of maturity and on maturity can be converted to RFC accounts.

Concessional Tax treatment for Foreign exchange assets: NRE/FCNR deposits with banks in India and investments in Government securities and company debentures out of foreign exchange funds would be eligible for a flat income tax of 20% on their income after permanent return of the NRI. The concession will be available till maturity of these investments.


This is a Scheme approved by Reserve Bank of India permitting persons of Indian nationality or origin, who have returned to India on or after 18th April 1992 for permanent settlement (Returning Indians), after being resident outside India for a continuous period of not less than one year, to open foreign currency accounts with banks in India for holding funds brought by them to India.

Persons who have returned to India before 18th April 1992 can also open RFC account if (a) they are holding foreign currency assets abroad with RBI's permission or (b) they are in receipt of pension or other monetary benefits from their erstwhile employers abroad.

RFC account can be held singly or jointly in the names of eligible persons.

RFC account can be maintained in the form of Savings, Current and term deposit. No cheque books are given for RFC-SB account.

RFC account can be opened and maintained in US Dollars, Pounds Sterling and Deutsche Marks.

Only certain permissible credits viz., remittances in any permitted currency from abroad, pension or any other monetary benefits received from abroad, interest on RFC accounts, foreign currency notes/travelers cheques, transfers from other RFC account of the account holder, balance in NRE/FCNR account at the time of his arrival in India and any other amount specifically permitted by RBI are allowed under RFC. Funds in RFC accounts can be remitted abroad for any bona fide purpose of the account holder and his dependents including exchange required for travel and other personal purposes and investments.

Funds can be transferred from one RFC account to another RFC account of the same person. Withdrawals/Payments other than foreign currency remittance abroad, shall be made in equivalent Indian Rupees only. Returning NRIs are required to redesignate their Non-resident accounts as Resident Rupee/RFC accounts after their arrival in India.

However, RBI has now permitted Returning Indians to continue their FCNR (B) deposits till the original maturity date and on maturity be transferred to RFC accounts. RFC accounts are eligible for interest benefits, as prescribed by the Bank from time to time.

No loans/advances are allowed whether directly or indirectly against balance in an RFC account.  If the Returning Indian subsequently goes abroad to become an NRI, the balance in the RFC account can be converted to NRE/FCNR account. Interest income from RFC is excempt from income-tax till such time the Returning Indian maintain the status of Resident but Not Ordinarily Resident (RNOR). Hence if the Returning NRI had been non-resident for a continous period of 2 years, he get excemption from income-tax for subsequent 9 years.


Tax Related Issues


Meaning of Non-Resident under Income Tax Act, 1961

The definition of a non-resident for the purpose of Indian Income tax Act is different than that of FEMA 1999 or for that matter of Exchange Control purposes. 

Liability to pay tax does not depend on the nationality or domicile of the tax payer but on his residential status. The residential status is to be determined in following three broad categories:

  • Residents in India
  • Resident but not ordinarily resident
  • Non-residents

Residential status is determined on the basis of physical presence for every year separately as per the provisions of Income Tax Act, 1961explained in the following paragraphs.


Basic conditions for a Resident

  • In India for more than 182 days or more during previous year
  • In India for 60 days or more during previous year AND 365 days or more during the 4 years prior to the previous year.

Exceptions permitted in the basic conditions

  • A citizen who leaves India in any year for employment is not treated as a resident in that year , unless he has been in India for 182 days or more.
  • For an Indian citizen or a person of Indian origin, who is abroad, and who comes on a visit to India, the period of 60 days in (2) above is extended to 180 days.

Additional conditions

  • Resident in India at least 9 out of 10 previous years prior to the previous year AND
  • In India for 730 days or more during 7 years prior to the previous year.

Resident but not ordinarily resident- If the individual satisfies either of the basic conditions, but does not satisfy both/any of the additional conditions.

Non resident- If the individual does not satisfy any of the basic conditions.


 Type of income

Tax incidence in case of

Resident Resident but not ordinarily resident Non- Resident
Income received or deemed to be received in India, wherever accrued Taxable Taxable Taxable
Income accrued or arisen or deemed to be accrued or arisen in India, wherever received Taxable Taxable Taxable
Income received and accrued outside India from a business/ profession in India Taxable Taxable Exempt
Income received and accrued outside India from a business/ profession outside India Taxable Exempt Exempt
Income earned and received outside India, subsequently remitted to India (At the time of remittance) Exempt Exempt Exempt

  Tax Concessions - NRE Accounts In General

  1. Interest exempt from Income Tax.

  2. Balance in a/c exempt from Wealth Tax.

  3. Gifts from such a/cs exempted from Gift Tax
    (Gift tax has however been totally abolished w.e.f 1st October 1998)

  4. These concessions are not available for Non Resident (Ordinary) Accounts.





  • Safe custody of Deposit Receipts and standing instructions.
  • Locker facility.
  • Nomination facility
  • Introduction is required for opening Non resident accounts.
    Introduction can be provided in any one of the following manner:

    • Getting the signature on the application forms duly witnessed by your Bank under their seal and signature.

    • By persons already having accounts including residents, ex-employers.

    • Getting the signature on application attested by officials of Indian Embassy or Consulate abroad under their seal and signature.

  • If the non resident is already having any other category of account with the bank, no further introduction is necessary.
  • Under NRE scheme, Recurring Deposits can also be opened.
  • Term Deposits under NRI schemes are accepted under two categories:
    1. Fixed Deposit (Simple interest)
    2. Reinvestment deposit scheme (Compound interest)
  • Interest earned on FCNR(B)/NRE/NRNR deposits is exempted from Indian income tax. In the case of NRO accounts the deposit is subject to wealth tax for the deposit amount and income tax at source for the interest earned.
  • Deposits will be renewed automatically based on depositor's instructions.


NRIs can avail loans/advances against NRE, FCNR (B), NRNR and NRO term deposits for all purposes other than re-lending, carrying on agricultural/ plantation activities and real estate.

Loans can also be granted to residents/third parties against NRE/FCNR(B)/ NRNR/NRO deposits for personal purposes or for carrying on business activities other than agricultural/plantation activities.

For more information please contact any of our branch where you maintain NRE A/c. or

Chief Manager (NRI), State Bank of Travancore , Head Office, Poojappura, Trivandrum - 695 012.

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