Better deal for NRIs at home as banks raise deposit rates

In an NRE account, funds standing to the credit and the interest earned thereon are remittable outside India in free foreign exchange, without RBI’s permission. The interest income is not subject to Indian income tax. Credits to the account should be in the form of remittance in foreign exchange from outside India, as well as other funds, which are eligible to be remitted outside India in free foreign exchange.

Funds from local sources are not eligible to be credited to these accounts, unless they are otherwise remittable outside India, in terms with existing Exchange Control Regulations.

An FCNR account can be opened in four foreign currencies — pound sterling, US dollar, Japanese yen and euro. For the purpose of opening an account, remittance in foreign exchange, in the same currency, should be received in India. The account can be opened only for fixed deposits with a minimum maturity of one year and a maximum maturity of three years.