NRI (Non-Resident Indian): An NRI is an individual of Indian origin or descent who resides outside India for employment, business, or other purposes for an indefinite period.
1. NRI Banking:
- NRI Banking refers to banking services specifically tailored for Non-Resident Indians.
- NRIs can open various types of accounts to manage their finances while staying abroad.
2. Types of NRI Accounts: a) NRE (Non-Resident External) Account: – Currency: Indian Rupees (INR) – Funds Source: Funds remitted from abroad – Tax Status: Interest income is tax-free in India – Purpose: Savings, investments, and repatriation of funds
b) NRO (Non-Resident Ordinary) Account: – Currency: Indian Rupees (INR) – Funds Source: Income earned in India and abroad – Tax Status: Interest income is taxable in India – Purpose: Managing income earned in India, payments, and local expenses
c) FCNR (Foreign Currency Non-Repatriable) Account: – Currency: Major foreign currencies (USD, EUR, etc.) – Funds Source: Foreign earnings – Tax Status: Interest income is tax-free in India – Purpose: Hedging against exchange rate fluctuations, fixed deposits
3. Features and Benefits of NRI Accounts:
- Remittance of funds to India and abroad
- Easy access to local banking services in India
- Facilitation of investments in India
- Tax benefits based on the type of account
MCQs:
1. What does NRI stand for? a) National Resource Investor b) Non-Resident Indian c) New Resident Identity d) Native Residency Indicator Answer: b) Non-Resident Indian
2. Which NRI account allows repatriation of funds? a) NRE Account b) NRO Account c) FCNR Account d) NRCS Account Answer: a) NRE Account
3. In which currency are NRE accounts denominated? a) US Dollars (USD) b) Euros (EUR) c) Indian Rupees (INR) d) Japanese Yen (JPY) Answer: c) Indian Rupees (INR)
4. What is the tax status of interest income in NRO accounts? a) Tax-free b) Taxable c) Tax-exempt in India, taxable abroad d) Tax-exempt abroad, taxable in India Answer: b) Taxable
5. Which NRI account is used to manage foreign earnings in foreign currencies? a) NRE Account b) NRO Account c) FCNR Account d) RFC Account Answer: c) FCNR Account
These notes and MCQs provide an overview of NRI banking and the types of NRI accounts available. Keep in mind that banking regulations and offerings may vary, so it’s important to refer to official banking sources for the most accurate and up-to-date information.