Banking - NRI / PIO Accounts

NRI- Non Resident Indian
PIO- Person of Indian Origin

(a) Resident of India :- 

• Citizen of India
• Foreigners for a long term stay in India.

(b) Non- resident of India :-

• NRI/PIO
• Foreigners on a short term visit to India (upto 6 months).

FEMA:-

Foreign Exchange Management Act passed in 1999 & was implemented from 2000.

FEMA definition for NRI:-

• Under FEMA, a NRI is a citizen of India who went abroad for the purpose of 

(a) Employement

(b) Study

(c) Business

• They can open bank Account in India without the prior permission of RBI.
• Residents of Pakistan And Bangladesh Needs Prior Permission from RBI.
• NRI/PIO can open NRO saving account with post office.

NRO:- Non Resident Ordinary.

Types Of Accounts For NRI / PIO:-

1. NRO
2. NRE
3. FCNR(B)
4. RFC

(i) NRO :- Non Resident Ordinary Rupee Account.

• This account is for the purpose of income earned by NRI/ PIO in INDIA.
• CA/SA/RD/FD are offered.
• The interest rates shall be decided by the bank but it shall not be more than those offered to the Resident of India.
• The amount is deposited in INR & it is repatriable upto 1Million USD per year after payment of Taxes.
• Foreigners on a short term visit to India are offered only NRO accounts.

(ii) NRE Accounts:- Non Resident External Rupee Account.

• This account is for the purpose of income earned by NRI/PIO outside India for transferring to India.
• CA/SA/RD/FD are offered.
• On term deposits upto 1 year interest rates are decided by RBI and for the rest by the Banks.
• The amount is deposited in INR and is Fully repatriable after payment of taxes.
• anks can provide loan facility on such accounts.

(iii) FCNR(B) Accounts:- Foreign Currency Non Resident Bank Account.

• This account can be opened in fully convertible foreign currency.
• RBI has allowed NRI/PIO to open this account in following currency:-

(a) USD

(b) AUSD

(c) CAND

(d) Japanese YEN

(e) Great Britain POUND

(f) EURO.

• Only term deposit of 1-5 years are offered.
• The interest Rates are decided by Banks but, the upper limit is decided by RBI.
• The amount is fully repatriable in the same currency in which it was deposited after payment of Taxes.
• Banks can provide loan against the deposits.

(iv) RFC accounts:- Resident Foreign Currency Accounts.

• This account is for the returning NRI/PIO to India and they can transfer there deposits from NRE & FCNR(B) to this account.
• CA/SA/FD/RD are offered.

ESCROW, NOSTRO & VOSTRO

(i) ESCROW:- It is a separate bank account for keeping money that is the property of others & normally no interest are paid on such accounts.

(ii) NOSTRO:- It is a Bank Account held in a foreign country by a domestic bank dominated in the currency of the foreign country..

(iii) VOSTRO:- It is a bank account held by a domestic bank in its home country for foreign banks.

ARBITRAGE:-

The simultaneous buying and selling of an Assett in order to benefit from the difference in price is called Arbitrage.