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Financial Planning and NRI Planning

NRI FAQ's

Who is an NRI?

An NRI is an Indian citizen who stays outside India.
a. For purposes of carrying out employment or any business or vocation.
b. Under circumstances indicating an intention to stay outside India for an uncertain duration.
Any Indian citizen deputed outside India for a temporary period in connection with employment.

Who is a PIO?

A citizen of a foreign country (other than a citizen of Bangladesh or Pakistan) is a PIO.

What type of saving bank account(s) can be opened by an NRI or PIO in India?

Any NRI/PIO can open two types of savings accounts with any bank in India. They are NRE and NRO bank accounts.

What is a NRE account?

A NRE bank account is an external saving bank account opened for Non resident Indians. This is why it is known as Non-Resident External account. Since it is an external account, any monies lying in NRE account can be taken outside the country or in other words, the monies lying in NRE account are fully repatriable. This money can be converted into any foreign currency at the behest of the account holder and can be remitted outside the country.

What is a NRO account?

A NRO bank account is an ordinary saving bank account opened for Non resident Indians. This is why it is known as Non-Resident Ordinary account. Since it is an ordinary account i.e. as good as a normal saving bank account, monies lying in NRO account cannot be taken outside the country or in other words, the monies lying in NRO account are not repatriable.

Can money be transferred from NRE account to NRO account?

Yes money can be freely transferred from NRE account to NRO account.

Can money be transferred from NRO account to NRE account?

No, money cannot be transferred from NRO account to NRE account.

What is the status of NRO/NRE accounts on the return of the account holder to India?

RBI has advised banks to re-designate such accounts as resident accounts on return of the account holder to India.

In case a resident Indian becomes a non-resident, will he/she be required to change the status of his/her holding from Resident to Non-Resident?

As per section 6(5) of FEMA, NRI can continue to hold the securities, which he/she had purchased as a resident Indian, even after he/she has become a non-resident Indian, but has to transfer the shares to his NRO (Non Resident Ordinary) account

Can NRIs invest in shares, debentures and units of Mutual Funds in India?

NRIs are permitted to make direct investments in shares/ debentures of Indian companies/ units of mutual fund. They are also permitted to make portfolio investments i.e . purchase of share / debentures of Indian Companies through stock exchange. These facilities are granted both on repatriation and non-repatriation basis.