Non-resident (Non-repatriable) Rupee Deposit Scheme The scheme enables the non-residents, including those of non-Indian origin, to invest in term deposit on non-repatriation basis but earning interest at rates determined by the bank concerned. It came into effect on 15th June 1992.
Advantages of Non-resident Rupee Deposit Scheme to depositor:
(i) Income from the deposits is free from Income-tax. Exemption from Income-tax is not available to resident donee and those residents who being joint holders, become owners of the deposits as survivors of the non-resident depositors.
(ii) The deposits are free from Gift Tax for one-time gifting, in the case of NRIs only. In the case of individual deposit holders, the amount of the deposit can be gifted to a non-resident, or to close relative in India, or to any Charitable Trust in India recognised under income-tax.
(iii) Rate of interest on deposit and on borrowing is not regulated but determined by the bank concerned.
Advantages of Non-resident Rupee Deposit Scheme to bank:
(i) The deposits are free from CLR and SLR requirements.
(ii) Lending against these deposits will not be considered as part of net bank credit for the purpose of determining priority sector lending.
1. Opening of account. The account can be opened by non-residents, including overseas corporate bodies, by:
(a) remittance from abroad in freely convertible foreign exchange; or
(b) transfer of funds from existing NRE/FCNR accounts of the non-resident account holder. No penal interest will be charged for premature closure of NRE/ FCNR account for investment in the scheme.
2. Joint Account. The account can be held jointly with other non-residents, or close resident relatives.
3. Period. 6 months to 3 years.
4. Interest. Determined by the bank concerned.
5. Renewal. The principal and interest will not be allowed to be repatriated outside India. The deposits can be renewed as also shifted from one bank to another. If the amount of the deposit is withdrawn or invested in other schemes, it will not qualify for renewal under the scheme.
6. Foreclosure. Banks may allow premature withdrawal and levy penalty for premature withdrawal as per their discretion.
7. Investment. Investment out of the deposit will be allowed only on non-repatriation basis. Proceeds of such investments cannot enjoy the facilities of the scheme .
8. Loans/Overdrafts. Loans or overdraft can be granted in India to deposit holders against these deposits for the purpose other than investment. The margin and rate of interest may be decided by lending bank. Payment of loan can be by way of further remittance from abroad or debit to NRE/FCNR/NRO account of the depositor, or by adjustment against maturity proceeds of the deposit.
