NRE BANK ACCOUNTS and DEPOSITS

A) NRE Accounts (Principal / Interest Repatriable)

Savings : The interest rates on NRE Savings deposits should not exceed LIBOR / SWAP rate for six months maturity on USD Deposits.

Term Deposits: For 1 year to 3 years maturity, contracted effective close of business on 17.04.2004, should not exceed the LIBOR / SWAP rates for USD of Corresponding maturity plus 50 basis points.

a) FCNR (B) (Principal / Interest Repatriable)

Term deposit can be placed with Ads in India in 4 specific foreign currencies. (USD, Pounds, EURO, YEN)

Rate of interest Fixed or floating within the ceiling rate of LIBOR / SWAP rates for the respective currency / corresponding term minus 25 basis (expect YEN)

b) NRO Accounts (Current Earning Repatriable)

Savings Normally operated for crediting rupee earnings / income such as dividends, interest.

Term deposits Banks are free to determine interest rates.

d) Repatriation from NRO Balances

Authorized dealers can allow remittance/s upto USD 1 million for bonafide purpose per calendar year from balances in NRO accounts subject to payments of applicable taxes. The limit of USD 1 million per year includes sale proceeds have been held by the NRIs / PIO for the period of 10 years. In case a property is sold after being held for less than 10 years,remittance can be made if the sale proceeds that have been held by the NRI /PIO for the balance period in eligible investments.

II - Other Investments on Repatriation Basis.

Government dated securities / treasury bills.
Units of domestic mutual funds
Bonds issued by a public sector undertaking (PSU) in India .
Shares in Public sector Enterprises being dis-invested by the Government of India, provided the purchase is in accordance with the terms and conditions stipulated in the notice inviting bids.
Shares and convertible debentures of Indian companies under foreign direct investment (FDI) scheme ( including automatic route and Foreign Investment Promotion Board (FIPB))
Shares and convertible debentures of Indian companies through stock exchange under Portfolio Investment Scheme.

III. Other Investments on Non-repatriation Basis.

Units of Money Market Mutual Funds in India .
The capital of a firm or proprietary concern in India , not engaged in any agricultural or plantation activity or real estate business.
Deposits with a company registered under the Companies Act , 1956 including NBFC registered with RBI , or a body corporate created under an Act of Parliament or state Legislature , a proprietorship concern or a firm out of rupees funds which do not represent inward remittances or transfer from NRE/FCNR(B) Accounts into the NRO account.

IV. Investment in Immovable Property.

May acquire immovable property in India other than agricultural / plantation property or a farm house out of repatriable and non-repatriable funds.

Housing Loan in rupees availed of by NRIs from ADs/Housing Financial Institutions can be repaid by the close relatives in India of the borrower may repatriate:

Sale proceeds of immovable property acquired in India to the extent of repatriable funds used for acquiring the property, without any lock-in-period, upto two residential properties. The balance will be repatriable NRO Account subject to conditions mentioned at item. I(d)

V. Facilities to Returning NRIs/PIO.

Returning NRIs/PIO

May continue to hold, own, transfer or invest in foreign currency, foreign security or any immovable property situated outside India, if such currency , security or property was acquired , held or owned when resident outside India.
May open, hold and maintain with an Authorised Dealer in India a Resident Foreign Currency (RFC) Account to transfer balances held in NRE / FCNR(B) accounts. Proceeds of assets held outside India at the time of return , can be credited to RFC account. The funds in RFC accounts are free from all restriction on investment in any form outside India .

Forex Facilities for Residents ( Individuals ) (As on June 30, 2004 )

Private Travel :

Foreign exchange upto USD10,000 in any calendar year for tourism or private travel to any country other than Nepal and Bhutan on the basis of self declaration. For travel to Nepal and Bhutan , Indian currency can be taken without any limit except Indian currency notes of denominations of Rs.500 and above.

Study , Medical Treatment , Employment, Maintenance of Close Relatives Abroad / Emigration.

Foreign exchange upto USD100,000 on the basis of self certification. For medical treatment , in addition to USD100,000 foreign exchange upto USD 25,000 can be taken for meeting boarding/travel expenses of the patient and also of the person accompanying the patient. Foreign exchange in excess of the limits prescribed here can be drawn on the basis of documentary evidence of the requirement. Students going abroad for studies are treated as Non-Resident Indians(NRIs) and are eligible for all the facilities available to NRIs under FEMA. In addition , they can receive remittances) upto USD 100,000 from close relatives from India on self -declaration towards maintenance, which could include remittances towards their studies also, ii) upto USD 1 million out of sale proceeds / balances in their account maintained with an authorised dealer in India , iii)educational and other loans availed of by students as resident in India can be allowed to continue. There is no dilution in the existing remittance facilities to students with regard to their academic pursuits.

International Credit Cards

International Credit Cards (ICCs) can be used for :

meeting expenses / making purchases while abroad to the extent of the limit of the card.

making payments in foreign exchange for purchase of books and other items through internet.

Residents holding a foreign currency account in India or with a bank overseas is also free to obtain ICCs issued by overseas banks and other reputed agencies.

Simplified Procedure for Small Value Remittances

Remittances can be made upto USD 5000 for any permissible current account transactions using a simple application cum declaration form.

Gifts and Donations

Gifts/donations can be made to anybody upto USD 5,000 every year per remitter on self certification.

Other Current Account Transactions

Foreign exchange can be freely drawn for all other bonafide current account transactions (other than those which are restricted or are subject to specific limits) on production of documentary evidence to the satisfaction of the Authorised Dealer.

Surrender of Foreign Exchange on Return

Foreign exchange upto USD 2,000 , in the form of foreign currency notes or Travelers ' Cheques (TCs) can be retained indefinitely for future use. Amounts in excess of USD 2,000 have to be surrendered to a bank within 90 days and Travelers cheques within 180 days of return or credited to Resident Foreign Currency (Domestic) { RFC (D) } Account.

Foreign coins can be retained indefinitely without any limit.

Resident Foreign Currency ( Domestic ) Account

Residents can open Resident Foreign Currency (Domestic Account) with a bank in India for crediting :

unspent balances after travel abroad,

Currency , travelers cheques,bank drafts received as gifts from or for services rendered to non-resident while in India .

Foreign exchange earnings received , through banking , channel, as honorarium , consultancy , and royalty for any services or towards exports of goods.

RFC(D) accounts are NOT interest bearing and there is no ceiling on the balances that can be built up in these accounts. The balances held in these accounts can be used for any purpose for which foreign exchange can be bought from a bank of India.

ESOP Scheme

A resident individual can make remittances for the acquisition of foreign securities under Employees Stock Option (ESOP) Scheme. The resident individual, however, has to be an employee or a director of an Indian office or branch of a foreign company with equity holding less than 51 %. The shares so acquired can be sold without Reserve Bank's permission provided the proceeds thereof are repatriated to India .

Overseas Portfolio Investment

Resident Individuals can invest without monetary limit in equity and debt instruments of overseas companies listed on a recognized stock exchange in India (as on January 1 of the year of the investment).

Receipt of Dis-investment Proceeds / Sponsored ADRs/GDRs

Resident shareholders of Indian companies, who offer their shares for conversion to ADRs/GDRs under the Scheme of sponsored ADRs/GDRs can, receive the sale proceeds in foreign exchange. The proceeds can be credited to their RFC (D) account.

Purchase of Air Tickets

Residents may extend hospitality to non - residents and book their air tickets against prior inward remittance.

Residents may book tickets in India for their visit to any third country sector. That is Residents can book their tickets for travel to London / New York through domestic / foreign airlines in India itself.

Liberalized Remittance Scheme of USD25, 000

Under this scheme, resident individuals may freely remit upto USD 25000 per calendar year for any permissible current or capital account transactions or a combination of both.

Acquire and hold immovable property or shares or any other asset outside India without the prior approval of Reserve Bank.

Open, hold and maintain foreign currency account with a bank outside India for making remittances under the scheme without the permission of Reserve Bank.

The foreign currency accounts may be used for putting through all transactions connected with or arising from remittances eligible under the scheme.

Repayment of Housing Loan availed of by an NRI

A resident close relative of an NRI can repay the housing loan in rupees availed of by the latter from an AD/Housing Finance Institution in India .

Please visit www.faqs.rbi.org.in for more detailed information.