What is NRO Account

NRO Account | Videshi.com

What Is A NRO (Non-Resident Ordinary) Account ?

In Banking terminology, the term NRO Account refers to funds deposited with an Indian financial institution opened by an Indian national with the intention of becoming a NRI. An NRO account is kept in Indian rupees and cannot be converted and repatriated into foreign currency.

Eligibility :

  • Persons of Indian nationality or origin residing abroad.
  • Resident Indians by inward remittances from abroad.


Types Of NRO Account

  • Savings Account  
  • Current Account 
  • Term / Fixed Deposit Account


Documents Required For NRO Account

In case of NRIs, Properly filled Account Opening form with

  • Copy of the Passport
  • Copy of Permanent Account Number (PAN)
  • Visa / Residence Permit
  • Two Copies of Recent Photographs
  • Initial Money Remittance

In Case of resident Indians, as stated under Savings Bank Account


Difference Between NRE and NRO Accounts

Repatriation :

  • NRE account is freely repatriable (Principal and interest earned).
  • NRO account has restricted repatriability. i.e permitted remittance allowed from NRO Account is up to USD 1 million net of applicable taxes in a financial year( April - March) after giving undertaking along with a certificate from a chartered accountant.

Tax Treatment :

  • NRE account is Tax free (No Income tax, Wealth tax and Gift tax) in India.
  • Interest earned in NRO Account and Credit Balances are subject to respective Income tax, Wealth tax and Gift tax.

Joint Holding :

  • NRE account can be jointly held with another NRI but not with resident Indian.
  • NRO account can be held with NRI as well as resident Indian.

Deposit and Withdrawl of Funds :

  • You can deposit funds from a foreign country (foreign currency) in both NRE and NRO accounts. Funds originating from India ( Indian rupees) can only be deposited in an NRO account and cannot be deposited in an NRE account.
  • Withdrawals from both NRE and NRO accounts can only be made in INR.

Funds Transfer :

  • NRE account allows you to transfer funds to another NRE account as well as to an NRO account.
  • You can transfer funds from an NRO to another NRO account, but you cannot transfer funds from an NRO account to an NRE account.

Related Questions

Q: Are NRO/NRE account holders eligible for loans against their fixed deposits?

A: Yes, except for the purpose of relending, carrying on agricultural/plantation activities or for investment in real estate business. Loans against NRE fixed deposits can, however, be utilized for...

Q: What is the maximum value of loans that can be taken against NRE/FCNR deposits?

A: The total value of all loans taken against NRE / FCNR accounts should not exceed Rs. 20 lakhs

Q: Can a loan be given to third parties on the security of an NRE/FCNR deposit?

A: Yes, a loan can be given to the third party on the security of an NRE/FCNR deposits.

Q: What are the purposes for which loans are given against NRE/FCNR deposits?

A: Loans can be taken against NRE / FCNR deposits for the following purposes: *Personal purpose or for carrying on business activities *Direct investment on non-repatriation basis by way of...