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MASTER CIRCULARS
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Master Circular – Non-Resident Ordinary Rupee (NRO) Account
RBI/2008- 2009/16
Master Circular No. 03 /2008- 09
July 1, 2008
To,

All Authorised Dealer Category – I Banks and Authorised Banks

Madam / Sir,
Master Circular on Non-Resident Ordinary Rupee (NRO) Account
The acceptance of deposits by an Authorised dealer / Authorised bank from persons resident outside India are regulated by the
provisions of sub-sections (1) and (2) of Section 6 of the Foreign Exchange Management Act, 1999 read with FEMA Notification
No.5/2000 RB dated May 3, 2000 as amended from time to time.2. This Master Circular consolidates the existing instructions on
the subject of "Non-Resident Ordinary Rupee (NRO) Account" at one place. The list of underlying circulars/notifications
consolidated in this Master Circular is furnished in the Appendix.3. This Master Circular is being issued with a sunset clause of one
year. This circular will stand withdrawn on July 1, 2009 and be replaced by an updated Master Circular on the subject.
Yours Faithfully,
(Salim Gangadharan)
Chief General Manager-In-Charge

INDEX

1. Definitions

2. Eligibility

3. Types Of Accounts

4. Joint Accounts With Residents / Non- Residents

5. Permissible Credits / Debits

6. Remittance Of Assets

7. Foreign Nationals Of Non-Indian Origin On A Visit To India

8. Grant Of Loans/Overdrafts By Authorised Dealer / Bank To Account Holders And Third Parties

9. Change Of Resident Status Of Account Holder

10. Treatment Of Loans /Overdrafts In The Event Of Change In TheResident Status Of The Borrower

11. Payment Of Funds To Non-Resident / Resident Nominee

12. Operation Of Nro Account By Power Of Attorney Holder

13. Facilities To A Person Going Abroad For Studies

14. International Credit Cards

15. Income-Tax

Annex-1

Statement / Returns To Be Submitted To The Reserve Bank

Annex-2

Operational Instructions For Authorised Dealer Banks

Appendix
 Note

1. Definitions Non-Resident Indian (NRI): NRI for this purpose is defined in Regulation 2 of FEMA
Notification No.5 dated May 3, 2000. In terms of this Notification, an NRI is a person
resident outside India who is a citizen of India or is a person of Indian origin.
Person of Indian Origin (PIO): PIO for this purpose is defined in Regulation 2 of FEMA
Notification ibid as a citizen of any country other than Bangladesh or Pakistan, if (a)
he at any time held Indian passport; or (b) he or either of his parents or any of his
grand-parents was a citizen of India by virtue of the constitution of India or the
citizenship act, 1955 (57 of 1955); or (c) the person is a spouse of an Indian citizen
or a person referred to in sub-clause (a) or (b).

2. Eligibility (A) Any person resident outside India (as per Section 2 of FEMA), may open NRO
account with an Authorised Dealer bank for the purpose of putting through bonafide
transactions denominated in Rupees, not involving any violation of the provisions of
FEMA, Rules, Regulations made thereunder.
(b) Opening of accounts by individuals / entities of Bangladesh / Pakistan nationality
/ ownership requires prior approval of Reserve Bank.

3. Types Of NRO accounts may be opened / maintained in the form of current, savings, recurring
Accounts or fixed deposit accounts. Rate of interest applicable to these accounts and
guidelines for opening, operating and maintenance of such accounts shall be in
accordance with directives/instructions issued by Reserve Bank from time to time.

4. Joint The accounts may be held jointly with residents and / or with non-residents.
Accounts with
Residents /
Non- Residents

5. Permissible A. Credits (i) Proceeds of remittances from outside India through normal banking
Credits / Debits channels received in foreign currency which is freely convertible.
(ii) Any foreign currency which is freely convertible tendered by the account holder
during his temporary visit to India. Foreign currency exceeding USD 5000/- or its
equivalent in form of cash should be supported by currency declaration form. Rupee
funds should be supported by encashment certificate, if they represent funds
brought from outside India.
(iii) Transfers from rupee accounts of non-resident banks.
(iv) Legitimate dues in India of the account holder. This includes current income like
rent, dividend, pension, interest, etc. As also sale proceeds of assets including
immovable property acquired out of rupee/foreign currency funds or by way of
legacy/inheritance.
B. Debits (i) All local payments in rupees including payments for investments in India
subject to compliance with the relevant regulations made by the Reserve Bank.
(ii) Remittance outside India of current income like rent, dividend, pension, interest,
etc. in India of the account holder.
(iii) Remittance up to USD one million, per financial year (April-Mmarch), for all
bonafide purposes, to the satisfaction of the authorised dealer bank.
6. Remittance of 6.1 Remittance Of Assets By A Foreign National Of Non-Indian Origin
Assets
A citizen of a foreign state, not being a citizen of Nepal or Bhutan or a Person of
Indian Origin (PIO), who has retired from an employment in India, or has inherited the
assets from a person referred to in sub-section (5) of Section 6 of the FEMA; or is a
widow resident outside India and has inherited assets of her deceased husband who
was an Indian citizen resident in India, may remit an amount, not exceeding USD 1
million per financial year out of the balances in the account, on production of
documentary evidence in support of acquisition, inheritance or legacy of assets by
the remitter and an undertaking by the remitter and certificate by a Chartered
Accountant in the formats prescribed by the Central Board of Direct Taxes vide their
circular no.10/2002 dated October 9, 2002.
6.2 Remittance of assets by an NRI/PIO
(a) NRI/PIO may remit an amount, not exceeding USD 1 million per financial year, out
of the balances held in NRO accounts / sale proceeds of assets / the assets in India
acquired by him by way of inheritance / legacy, on production of documentary
evidence in support of acquisition, inheritance or legacy of assets by the remitter,
and an undertaking by the remitter and certificate by a Chartered Accountant in the
formats prescribed by the Central Board of Direct Taxes vide their circular
no.10/2002 dated October 9, 2002.
(b) NRI/PIO may, within the overall limit of USD 1 million. as stated above, remit sale
proceeds of assets acquired under a deed of settlement made by either of his
parents or a close relative (as defined in Section 6 of the Companies Act, 1956) and
the settlement taking effect on the death of the settler, on production of the original
deed of settlement and an undertaking by the remitter and a certificate by a
Chartered Accountant in the formats prescribed by the Central Board of Direct Taxes
vide their circular no.10/2002 dated October 9, 2002.
6.3 Assets acquired in India out of rupee funds
NRI/PIO may remit sale proceeds of immovable property purchased by him as a
resident or out of rupee funds as NRI/PIO, without any lock-in-period, subject to the
above limit of USD 1 million, per financial year.
6.4 Restrictions
(a) The remittance facility in respect of sale proceeds of immovable property is not
available to citizens of Pakistan, Bangladesh, Sri Lanka, China, Afghanistan, Iran,
Nepal and Bhutan.
(b) The facility of remittance of sale proceeds of other financial assets is not
available to citizens of Pakistan, Bangladesh, Nepal And Bhutan.

7. Foreign NRO account (current/savings) can be opened by a foreign national of non-Indian

nationals of origin visiting India, with funds remitted from outside India through banking channel
non-Indian or by sale of foreign exchange brought by him to India. The balance in the NRO
origin on a visit account may be converted by the authorised dealer bank into foreign currency for
to India payment to the account holder at the time of his departure from India provided the
account has been maintained for a period not exceeding six months and the account
has not been credited with any local funds, other than interest accrued thereon.

8. Grant of (a) Loans to non-resident account holders and to third parties may be granted in
loans/overdrafts Rupees by authorized dealer / bank against the security of fixed deposits subject to
by authorised the following terms and conditions:
dealer / bank to (I) The loans shall be utilised only for meeting borrower's personal requirements
account holders and/or business purpose and not for carrying on agricultural/plantation activities or
and third parties real estate business or for re-lending.
(Ii) Regulations relating to margin and rate of interest as stipulated by Reserve Bank
from time to time shall be complied with.
(Iii) The usual norms and considerations as applicable in the case of advances to
trade/industry shall be applicable for such loans/facilities granted to third parties.
(b) Authorised dealer / bank may permit overdraft in the account of the account
holder subject to his commercial judgement and in compliance with the interest rate
etc. directives.
9. Change of (a) From Resident To Non-Resident
resident status When a person resident in India leaves India for a country (other than Nepal or
of account Bhutan) for taking up employment or for carrying on business or vocation outside
holder India or for any other purpose indicating his intention to stay outside India for an
uncertain period, his existing account should be designated as a non- resident
(ordinary) account.
When a person resident in India leaves for Nepal or Bhutan for taking up employment
or for carrying on business or vocation or for any other purposes indicating his
intention to stay in Nepal or Bhutan for an uncertain period, his existing account will
continue as a resident account. Such account should not be designated as Non-
Resident (Ordinary) Account (NRO).
(b) From Non- Resident to Resident
NRO accounts may be re-designated as resident rupee accounts on the return of the
account holder to India for taking up employment, or for carrying on business or
vocation or for any other purpose indicating his intention to stay in India for an
uncertain period. Where the account holder is only on a temporary visit to India, the
account should continue to be treated as non-resident during such visit.

10. Treatment of In case of person who had availed of loan or overdraft facilities while resident in
loans India and who subsequently becomes a person resident outside India, the authorised
/overdrafts in dealer / bank may at their discretion and commercial judgement allow continuance
the event of of the loan/overdraft facilities. In such cases, payment of interest and repayment of
change in the loan may be made by inward remittance or out of legitimate resources in India of the
resident status person concerned.
of the borrower

11. Payment of The amount due/payable to non-resident nominee from the NRO account of a
funds to Non- deceased account holder shall be credited to NRO account of the nominee with an
resident / authorised dealer / bank in India. The amount payable to resident nominee from the
Resident NRO account of a deceased account holder shall be credited to resident account of
nominee the nominee with a bank in India.

12. Operation of Powers have been delegated to the authorized dealers/banks to allow operations on
NRO account by an NRO account by Power of Attorney granted in favour of a resident by the non-
Power of resident individual account holder provided such operations are restricted to
Attorney holder (I) All local payments in rupees including payments for eligible investments subject
to compliance with relevant regulations made by the Reserve Bank; and
(Ii) Remittance outside India of current income in India of the non-resident individual
account holder, net of applicable taxes. The resident Power of Attorney holder is not
permitted to repatriate outside India funds held in the account other than to the non-
resident individual account holder nor to make payment by way of gift to a resident
on behalf of the non-resident account holder or transfer funds from the account to
another NRO account.

13. Facilities to Persons going abroad for studies are treated as Non-Resident Indians (NRIs) and are
a person going eligible for all the facilities available to NRIs. Educational and other loans availed of
abroad for by them as residents in India will continue to be available to them as per FEMA
studies Regulations.

14. International Authorised Dealer banks have been permitted to issue International Credit Cards to
Credit Cards NRIs/PIO, without prior approval of Reserve Bank. Such transactions may be settled
by inward remittance or out of balances held in the cardholder’s FCNR (B) / NRE /
NRO Accounts.

15. Income-Tax The remittances (net of applicable taxes) will be allowed to be made by the
authorised dealer banks on production of an undertaking by the remitter and a
certificate from a Chartered Accountant in the formats prescribed by the Central
Board Of Direct Taxes, Ministry Of Finance, Government Of India vide thier Circular
No. 10/2002 dated October 9, 2002 [cf. A.P. (DIR Series) Circular No. 56 dated
November 26, 2002].

Annex-1
Master Circular on Non-Resident Ordinary Rupee (NRO) Account
Statement / Returns to be submitted to the Reserve Bank

1 Facilities to Nris/PIO and Quarterly A. P. (DIR Series)

Foreign Nationals – Circular No. 12
Liberalisation- Remittance from dated November
NRO account. 16, 2006.
 

Annex-2
Master Circular on Non-Resident Ordinary Rupee (NRO)
Account Operational Instructions for Authorised Dealer Banks
1. General Authorised dealer banks may carefully study the provisions of the Act /
Regulations / Notifications issued under Foreign Exchange Management Act,
1999 (the Act).
Reserve Bank will not prescribe the documents which should be verified by the
authorised dealer banks while permitting remittances for various transactions.

In terms of the provisions contained in sub-section 5 of Section 10 of the Act,

before undertaking any transaction in foreign exchange on behalf of any person,
authorised dealer is required to obtain a declaration and such other information
from the person (applicant) on whose behalf the transaction is being
undertaken that will reasonably satisfy him that the transaction is not designed
to contravene or evade the provisions of the Act or any of the Rules or
Regulations made or Notifications or directions or orders issued under the Act.
Authorised dealer banks should preserve the information / documents obtained
by them from the applicant before undertaking the transactions for verification
by the Reserve Bank.
In case the person on whose behalf the transaction is being undertaken refuses
or does not give satisfactory compliance of the requirements of an authorised
person, he shall refuse in writing to undertake the transactions. Where an
authorised person has reasons to believe that a contravention or evasion of the
Act or the Rules or Regulations made or Notifications issued thereunder was
contemplated in the transaction that he has refused to undertake, he shall
report the matter to the Reserve Bank.
With a view to maintaining uniform practices, authorised dealer banks may
consider requirements or documents to be obtained by their branches to ensure
compliance with provisions of sub-section (5) of Section 10 of the Act.

2. Opening Opening of accounts by individuals/entities of Bangladesh / Pakistan nationality

of accounts / ownership requires prior approval of Reserve Bank. All such requests may be
by referred to the Chief General Manager-in-Charge, Foreign Exchange Department,
Bangladesh (Foreign Investment Division), Reserve Bank of India, Central Office, Mumbai-
/ Pakistan 400 001.
entities.

3. Remittance outside India of current income like rent, dividend, pension, interest,
Remittance etc. in India of the account holder is a permitted debit to the NRO account.
of current Authorised Dealer banks may allow repatriation of current income like rent,
income dividend, pension, interest, etc. of NRIs who do not maintain an NRO account in
India based on an appropriate certification by a chartered accountant, certifying
that the amount proposed to be remitted is eligible for remittance and that
applicable taxes have been paid/provided for.

4. (a) The remittance facility in respect of sale proceeds of immovable property is

Restrictions not available to citizens of Pakistan, Bangladesh, Sri Lanka, China, Afghanistan,
Iran, Nepal and Bhutan.
(b) The facility of remittance of sale proceeds of other financial assets is not
available to citizens of Pakistan, Bangladesh, Nepal and Bhutan.

5.Tax Authorised Dealer banks can allow remittances to non-residents only on

Compliance production of an undertaking by the remitter and a certificate from a Chartered
Accountant in the formats prescribed by the Central Board Of Direct Taxes,
Ministry Of Finance, Government of India vide their Circular No.10/2002 dated
October 9, 2002. [cf. A.P. (Dir Series) Circular No.56 dated November 26, 2002].

APPENDIX
List of Notifications / Circulars Which Have Been Consolidated In This Master Circular –
Non-Resident Ordinary Rupee (NRO) Account
Http://Www.Rbi.Org.In/Scripts/BS_Apcircularsdisplay.Asp
Http://Www.Rbi.Org.In/Scripts/Bs_Femanotifications.Aspx

Sl. No. Circular No. Date

1. Notification No. FEMA 62/2002-RB May 13, 2002

2. Notification No. FEMA 97/2003-RB July 8, 2003

3. Notification No. FEMA 119/2004-RB June 29,2004

4. Notification No. FEMA 133/2005-RB April 1, 2005

5. Notification No. FEMA 156/2007-RB June 13, 2007

1. AP (DIR Series) Circular No.45 May 14, 2002

2. AP (DIR Series) Circular No.1 July 2, 2002

 3. AP (DIR Series) Circular No.5 July 15, 2002

4. AP (DIR Series) Circular No.19 September 12, 2002

5. AP (DIR Series) Circular No.26 September 28, 2002

6. AP (DIR Series) Circular No.27 September 28, 2002

7. AP (DIR Series) Circular No.56 November 26, 2002

8. AP (DIR Series) Circular No.59 December 9, 2002

9. AP (DIR Series) Circular No.67 January 13, 2003

10. AP (DIR Series) Circular No.43 December 8, 2003

11. AP (DIR Series) Circular No.45 December 8, 2003

12. AP (DIR Series) Circular No.62 January 31, 2004

13. AP (DIR Series) Circular No.43 May 13,2005

14 AP (DIR Series) Circular No.12 November 16,2006

15. AP (DIR Series) Circular No.64 May 25, 2007

NOTE

For the convenience of Authorised Dealers, a table of Statements / Returns to be submitted to RBI and Operational Guidelines
have been given in Annex-1 & 2, respectively.

It is also clarified for information of all users that the Master Circular need not necessarily be exhaustive and a reference to
the relevant A. P. (DIR Series) circular is needed wherever further information / clarification is required.