An NRE account holder can intromit money from his account freely, whereas for an NRO account holder only local payment is allowed in rupees. He cannot repatriate his funds from account abroad. As a result only a NRE account holder is eligible to let in funds from abroad or let out local funds to his account abroad.
The funds which due to regulations under exchange control cannot be let out of India have to be accredited NRO accounts only. NRE account holder can hold joint account only with an NRI. NRE account holder is not permitted to have a joint account with a resident Indian. Whereas NRO account holder can open the account with a close relative who is a resident Indian.
Rate of interest: Interest rates for NRE accounts deposits cannot surpass the bank rate less by two points in percentage. For deposits exceeding a year tenure bank determine it themselves. For NRO accounts it is fixed as observed for domestic deposits.
An NRI can intromit funds abroad from the NRE account, freely. NRO account holder cannot do same from his funds which is originates mostly locally. Though a permissible extent is provided by the Reserve Bank of India for the interest earned on NRO account funds for fiscal year of 1994-95 and thereafter, for letting out of India.
The NRI who is NRE account holder and the NRO account holder can make the payment for air travel from, to or within India. This facility can be availed also by the members of family who are dependents. It has been authorized to the banks which are maintaining these accounts to allow these types of payments. It has also been allowed to the Airlines and the Shipping companies as well as their agents that they can take requitals in Indian currency that is rupees, which are taken out from the accounts of NRO or NRE accounts for the payments.
©2009 Copyright by Invest In India