Reserve Bank has clarified that authorized dealers may credit the current income like rent, dividend, pension, interest, etc. of NRIs to their Non-Resident (External) Rupee Accounts provided they are satisfied that the credit represents current income of the non-resident account holder and income tax thereon has been deducted/ paid/ provided for, as the case may be.

Credit of balances in the EEFC/RFC(D) Account on account of change of status.

Reserve Bank has clarified that the balances in the EEFC and RFC (D) Accounts may be allowed to be credited to NRE Account, at the option/ request of the account holders consequent upon change of their residential status from resident to non-resident.

Credit of sale proceeds of Foreign Direct Investments in India to NRE/FCNR (B) accounts.

In terms of Regulation 11 of the Notification No.FEMA.20 dated 3.5.2000 as amended from time to time, the sale proceeds can be remitted by a person resident outside India provided the investments were made out of foreign inward remittances. This facility is now extended to Non-Resident Indians/ Person of Indian Origin provided the investments in India are made either out of foreign inward remittances or by debit to NRE/FRNR account. Reserve Bank has further clarified that remittances can be credited in the NRE/FRNR accounts maintained in India by Non-Resident Indian/ Person of Indian Origin.

Permitted Debits

1. Local disbursements.
2. Remittances outside India.
3. Transfer to NRE/FCNR accounts of the account holder or any other person eligible to maintain such account.
4. Investment in shares/ securities/ commercial paper of an Indian company or for purchase of immovable property in India provided such investment/purchase is covered by the regulations made, or the general/ special permission granted, by the Reserve Bank.
5. Any other transaction if covered under general or specific permission granted by the Reserve Bank.

Rate of Interest

With effect from 16th December, 2011, Reserve Bank has deregulated interest rates on NRE deposits. Banks are now free to determine the rate of interest.

Loans against security of funds held to NRE/FCNR (B) Deposits.

1. Rupee Loans in India – Loans against NRE/FCNR (B) Fixed Deposits. Authorized Dealers and banks maintaining such accounts are permitted to grant Rupee loans in India to depositor/ third party without any ceiling subject to usual margin requirements**
2. Foreign Currency loan* in India/ outside India – Loans against NRE/FCNR (B) Fixed Deposits.
   The term 'loan' shall include all types of fund based/ non-fund based facilities. In case of FCNR deposits, the margin requirement shall be notionally calculated on the rupee equivalent of the deposits in accordance with para 9(2) of Schedule-2 of Foreign Exchange Management (Deposit) Regulations, 2000.
   
   Further the facility of premature withdrawal of NRE/FRNR deposits shall not be available where loans against such deposits are to be availed of. This requirement may specifically be brought to the notice of the deposit holder at the time of sanction of the loan. The existing loans which are not in conformity with the above instructions shall continue for their existing term and shall not be rolled over/ renewed. Other conditions are grant of loan against NRE/FRNR deposits shall remain unchanged.

Change of resident status of the account holder