Permitted Accounts in India for NRIs and PIOs

In India, Non-Resident Indians (NRIs) and Persons of Indian Origin (PIOs) have various permitted accounts that they can open and maintain. These accounts are designed to facilitate financial transactions and investments for NRIs and PIOs. Here are detailed notes on the permitted accounts in India for NRIs and PIOs:

  1. Non-Resident External (NRE) Account:
    • An NRE account is a rupee-denominated account that allows NRIs and PIOs to hold and manage their foreign income in India.
    • The account can be opened in the form of savings, current, recurring, or fixed deposit accounts.
    • NRE accounts are freely repatriable, meaning the funds held in these accounts can be freely transferred back to the foreign country without any restrictions.
    • The interest earned on NRE accounts is tax-free in India.
  2. Non-Resident Ordinary (NRO) Account:
    • An NRO account is a rupee-denominated account that allows NRIs and PIOs to manage their Indian income, earnings, or investments in India.
    • The account can be opened in the form of savings, current, recurring, or fixed deposit accounts.
    • NRO accounts have restricted repatriability, meaning funds can be remitted abroad subject to certain conditions and limits.
    • The interest earned on NRO accounts is subject to income tax in India.
  3. Foreign Currency Non-Resident (FCNR) Account:
    • An FCNR account is a foreign currency-denominated account that allows NRIs and PIOs to hold and manage their foreign currency earnings in India.
    • The account can be opened in various foreign currencies such as USD, GBP, EUR, etc.
    • FCNR accounts are freely repatriable, allowing the funds to be transferred back to the foreign country without any restrictions.
    • The interest earned on FCNR accounts is tax-free in India.
  4. Resident Foreign Currency (RFC) Account:
    • An RFC account is an account that can be opened by NRIs and PIOs who have returned to India and have become residents again.
    • The account allows individuals to hold and manage their foreign currency funds in India.
    • RFC accounts can be maintained in multiple currencies.
    • RFC accounts are freely repatriable, and the funds can be transferred back to the foreign country if required.
    • The interest earned on RFC accounts is exempt from tax for a certain period.
  5. Portfolio Investment Scheme (PIS) Account:
    • A PIS account is required by NRIs and PIOs for investing in the Indian stock market under the portfolio investment scheme.
    • The account is opened with a designated bank authorized by the RBI.
    • The PIS account enables NRIs and PIOs to buy and sell shares, debentures, and other securities listed on the Indian stock exchanges.
    • Transactions under the PIS account are subject to certain limits and reporting requirements.

It’s important to note that NRIs and PIOs need to comply with the guidelines and regulations set by the Reserve Bank of India (RBI) and other regulatory authorities while operating these permitted accounts. The specific terms, conditions, and documentation requirements may vary based on individual banks, account types, and regulatory changes, so it’s advisable to consult with the bank or financial institution to understand the detailed procedures and current regulations related to these permitted accounts.