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General
With a view to providing further incentives and wider options to persons
of Indian Nationality/Origin residing abroad (NRIs) and Overseas Corporate
Bodies predominantly owned by NRIs (OCBs) as well as giving opportunities
to persons of non-Indian origin and overseas corporate bodies owned by
them for making investments in India, Reserve Bank has formulated Non-resident
(Non-repatriable) Rupee Deposit Scheme. The Scheme came into effect from
15th June, 1992.
The
scheme is open to all non-residents including foreign citizens of non-Indian
origin (except Pakistani and Bangladeshi Nationals) and Overseas Corporate
Bodies owned by them. Accounts under the Non-resident (Non-Repatriable
) Rupee Deposit Scheme may be opened in Indian rupees by authorised dealers
out of the funds in freely convertible foreign exchange transferred for
the purpose to India in an approved manner from the county of residence
of the prospective non-resident account holder or from any other country.
Accounts may also be opened by transfer of funds from the existing NRE/FCNR
Accounts of the non-resident account holder. No penal interest is charged
in case of premature withdrawal of existing NRE/FCNR deposits for the
purpose of making investment under the scheme.
Authorised
dealers are free to fix the maturity period of such deposits between six
months and three years. They are also free to fix the rate of interest
payable on such deposits. The exact rates may be ascertained from the
concerned bank. The maturity proceed of the deposit will not quality for
repatriation outside India at any time. However, the interest accrued
on the deposits held under the scheme from the quarter beginning October
1, 1994 are eligible for repatriation .The income form the deposits under
the schemes will be free from Indian Income-tax. Exemption from Income-tax
will, however, not be available to resident donees and those resident
who being joint holders, become owners of the deposits as survivors of
the non-resident depositor.
NRNR
vis a vis NRO Account
The
depositor under both the schemes are accepted in Indian rupees on non-repatriation
basis. The main points of distinction under both the schemes are as under
:
(a)
Accounts under NR (NR) Scheme can be opened only with proceeds of fresh
remittances from abroad or by transfer from existing NR (E) FCNR Accounts
of the depositor, whereas legitimate local resources may be utilised to
open NRO Accounts.
(b)
Advances against security of deposit under NRO Scheme are governed by
directives of Reserve Bank of India, whereas banks have freedom to determine
rates of interest, margin etc. while granting advances against security
of deposits held under NR (NR) Scheme.
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