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Foreign Exchange Management (Deposit) Regulations, 2000 permits Non- Resident Indians (NRIs) to have deposit accounts with authorised dealers and with banks authorised by the Reserve Bank of India (RBI) which include:55
(i) Foreign Currency Non-Resident (Bank) Account [FCNR(B) Account]
(ii) Non-Resident External Account (NRE Account)
(iii) Non-Resident Ordinary Rupee Account (NRO Account)
FCNR(B) accounts can be opened by NRIs and Overseas Corporate Bodies (OCBs) with an authorised dealer. The accounts can be opened in the form of term deposits. Deposits of funds are allowed in Pound Sterling, US Dollar, Japanese Yen and Euro. Rate of interest applicable to these accounts are in accordance with the directives issued by RBI from time to time.
NRE accounts can be opened by NRIs and OCBs with authorised dealers and with banks authorised by RBI. These can be in the form of savings, current, recurring or fixed deposit accounts. Deposits are allowed in any permitted currency. Rate of interest applicable to these accounts are in accordance with the directives issued by RBI from time to time.
NRO accounts can be opened by any person resident outside India with an authorised dealer or an authorised bank for collecting their funds from local bonafide transactions in Indian Rupees. When a resident becomes an NRI, his existing Rupee accounts are designated as NRO. These accounts can be in the form of current, savings, recurring or fixed deposit accounts.
There were two more NRI deposit accounts in operation, viz., Non- Resident (Non-Repatriable) Rupee Deposit Account and Non-Resident (Special) Rupee Account—an amendment to Foreign Exchange Management (Deposit) Regulations, in 2002, discontinued the acceptance of deposits in
these two accounts from April 2002 onwards.
Repatriation of funds in FCNR(B) and NRE accounts is permitted. Hence, deposits in these accounts are included in India’s external debt outstanding. While the principal of NRO deposits is non-repatriable, current income and interest earning is repatriable. Account-holders of NRO accounts are permitted to annually remit an amount up to US$ 1 million out of the balances held in their accounts. Therefore, deposits in NRO accounts too are included in India’s external debt.