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: Can an NRI investor register a nominee?

A: Yes, an NRI investor can register a nominee.

Q: Can a POA (Power Of Attorney) invest on behalf of an NRI investor?

A: Yes, A POA has the authority to invest on behalf of the NRI investor and sign documents for initial and additional purchases as well as redemptions. While applying for purchase of units, the POA...

Q: What is the proof of Tax Deducted at Source (TDS)?

A: A TDS certificate is issued in the name of the first unit holder mentioning the details of the transaction and the tax deducted.

Q: How will the redemption process be paid?

A: Redemption proceeds are paid by a cheque payable to the first holder. The proceeds will be payable in Indian rupees. A tax shall be deducted at source.