Operational Aspects of NRI Business & Foreign Currency Accounts
A software engineer in Dubai, a tourist visiting Kerala, and a returning expat all need different account types â NRE for tax-free repatriable savings, NRO for India-sourced income, SNRR for a one-off transaction. Covers NRI/PIO account types, foreign nationals' accounts, repatriation, property rules, resident foreign currency accounts (RFC/EEFC), and FCRA 2010, with 50 exam-style MCQs with hidden answers.
Fully repatriable, no exchange-rate risk to depositor
RFC
Foreign currency (for residents)
Held by returning NRIs for their foreign-currency earnings/assets
1 Permitted Accounts for NRIs & PIOs
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NRE (Non-Resident External) Account
Rupee-denominated savings/current/term deposit account; principal and interest are fully repatriable; interest is tax-free in India; can be funded only from foreign-sourced income.
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NRO (Non-Resident Ordinary) Account
Rupee account for managing India-sourced income (rent, dividends, pension); interest is taxable in India (TDS applies); repatriation of balance is capped (currently USD 1 million per financial year, subject to conditions/CA certification).
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FCNR(B) Account
Foreign Currency Non-Resident (Bank) term deposit, held in a permitted foreign currency (USD, GBP, EUR, JPY, etc.); protects the depositor from rupee exchange-rate fluctuation; principal and interest fully repatriable.
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Memory Trick: "NRE Escapes, NRO Owes"
NRE = fully repatriable, tax-Exempt (Escapes tax). NRO = Ordinary India income, taxable and repatriation-capped (Owes tax).
2 Accounts for Foreign Nationals Visiting India
A foreign national (not a PIO) visiting India for a temporary period may open a Non-Resident Ordinary (NRO) account for local expenses during the visit, generally for a period not exceeding six months, based on a valid visa and passport, subject to enhanced KYC. Foreign nationals resident in India due to employment/business (meeting FEMA's residency test) may open resident accounts, subject to specified conditions and RBI approval where applicable.
3 SNRR Account
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For Non-Resident, Non-Repatriable-Routine Transactions
The Special Non-Resident Rupee (SNRR) Account is a rupee account that any person resident outside India (individual or entity) having a business interest in India may open, for putting through bona fide transactions in rupees not covered under any other specific FEMA account category â e.g. trade transactions, ECBs, or other permissible current/capital account transactions with an Indian counterparty. Balances in an SNRR account are repatriable, and the account must be aligned to the actual contract/business purpose it services.
4 Repatriation, Property & Investment by NRIs
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Acquisition of Immovable Property
NRIs/PIOs may acquire residential/commercial property in India (other than agricultural land, farmhouse, plantation, which generally require RBI's specific approval), funded through NRE/NRO/FCNR balances or inward remittance.
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Charge on Immovable Property
An NRI may create a mortgage/charge on their Indian property in favour of an Indian bank/AD as security for a rupee loan, subject to FEMA conditions.
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Repatriation of Sale Proceeds
Sale proceeds of property may be repatriated up to the original foreign-currency investment, subject to conditions (property limit of two residential properties, prescribed documentation), typically via NRO account with CA certification.
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Investments by NRIs/PIOs
NRIs may invest in Indian shares/debentures/mutual funds through the Portfolio Investment Scheme (PIS route, where applicable) and in government securities/NCDs on a repatriable or non-repatriable basis, per FEMA regulations.
5 Foreign Currency Accounts for Residents
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RFC (Resident Foreign Currency) Account
Opened by a returning NRI to hold foreign-currency assets/earnings brought back to India (e.g. retirement benefits, sale proceeds of foreign assets); freely usable, no repatriation restriction.
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EEFC (Exchange Earners' Foreign Currency) Account
Lets resident exporters/foreign-exchange earners retain a portion of their foreign exchange earnings in a foreign-currency account, avoiding repeated conversion for genuine forex requirements.
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Permitted FC Accounts Outside India
Residents (e.g. those deputed abroad, or exporters) may, under specific FEMA permissions, hold foreign currency accounts outside India for defined business purposes.
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Property Acquisition Abroad by Residents
Residents may acquire property abroad within the LRS limit, or by way of gift/inheritance, or through an overseas office maintained abroad, per FEMA rules.
6 Foreign Contribution (Regulation) Act, 2010
Purpose: The FCRA, 2010 regulates the acceptance and utilisation of foreign contributions/donations by individuals, associations and companies in India, to ensure such funds are not used for activities detrimental to national interest. Entities receiving foreign contributions must register with the Ministry of Home Affairs and route all such funds through a designated FCRA bank account, which â per amendments â must be maintained at a specified branch of the State Bank of India, New Delhi, as the primary receiving account.
Banks play a gatekeeping role: they must ensure foreign remittances credited to an FCRA-registered entity's account are reported to the authorities and that non-designated accounts do not receive foreign contributions, flagging suspicious cross-border donation patterns under AML norms.
â Key Takeaways
NRE accounts are fully repatriable and tax-free; NRO accounts hold India-sourced income, are taxable, and face repatriation caps; FCNR(B) is a foreign-currency term deposit shielding depositors from exchange-rate risk.
Foreign nationals visiting India temporarily may open a short-duration NRO account for local expenses.
The SNRR account serves bona fide rupee transactions of non-residents not covered by other specific account categories.
NRIs can acquire most immovable property in India (except agricultural land/farmhouse/plantation) and repatriate sale proceeds up to the original investment, subject to conditions.
RFC and EEFC accounts let residents hold foreign-currency earnings/assets without repeated conversion.
FCRA, 2010 regulates foreign contributions to Indian entities, requiring a designated FCRA account (SBI, New Delhi) as the primary receiving account.
đ Top 50 JAIIB-Style MCQs on NRI & Foreign Currency Accounts
Test your understanding with these 50 practice MCQs, closely modelled on the JAIIB (PPB) exam pattern. Each question has 5 options â the correct answer is hidden by default; tap "Show Answer" to reveal it along with a short explanation.
đ° NRE, NRO & FCNR(B)
1 An NRE account is:
A. Fully repatriable, with tax-free interest in India
B. Non-repatriable, with fully taxable interest
C. Only for use by resident Indians
D. Denominated in foreign currency
E. Restricted to a one-time deposit only
Answer: A. NRE accounts are fully repatriable with tax-free interest.
2 An NRO account is primarily used to:
A. Manage India-sourced income such as rent, dividends, and pension
B. Hold only foreign-currency deposits
C. Avoid all Indian taxation
D. Bypass KYC requirements
E. Fund political contributions
Answer: A. NRO accounts manage India-sourced income like rent/dividends/pension.
3 Interest earned on an NRO account is:
A. Taxable in India, with TDS applicable
B. Fully tax-exempt
C. Taxed only outside India
D. Never subject to TDS
E. Exempt for NRIs above age 60 only
Answer: A. NRO interest is taxable, with TDS deducted.
4 Repatriation from an NRO account is currently capped at approximately:
A. USD 1 million per financial year, subject to conditions
B. No cap whatsoever
C. USD 1,000 per financial year
D. USD 250,000, same as LRS always
E. Repatriation from NRO is entirely banned
Answer: A. NRO repatriation is capped around USD 1 million/FY, conditions apply.
5 FCNR(B) deposits are held in:
A. A permitted foreign currency, protecting the depositor from rupee exchange-rate risk
B. Indian rupees only
C. Gold bullion
D. Cryptocurrency
E. Equity shares
Answer: A. FCNR(B) protects depositors from rupee exchange-rate risk.
6 Which account type can be funded ONLY from foreign-sourced income (not from India-sourced income)?
A. NRE account
B. NRO account
C. Resident savings account
D. Current account of a resident firm
E. None of these have funding restrictions
Answer: A. NRE accounts must be funded from foreign-sourced income.
đ Foreign Nationals Visiting India
7 A foreign national visiting India temporarily may typically open, for local expenses:
A. An NRO account, generally for up to six months
B. An FCNR(B) term deposit only
C. No account of any kind, under any circumstance
D. An NRE account
E. Only a demat account
Answer: A. A short-duration NRO account is used for local expenses by visiting foreign nationals.
8 A foreign national opening an account in India would need to submit:
A. Passport with valid visa, subject to enhanced KYC
B. No documentation at all
C. Only a driving licence from their home country
D. An Indian ration card
E. A birth certificate only
Answer: A. Passport with visa and enhanced KYC apply.
đ SNRR Account
9 An SNRR account is opened by:
A. Any person resident outside India with a business interest in India, for bona fide rupee transactions
B. Only resident Indians
C. Only foreign governments
D. Only Indian minors
E. No one; SNRR accounts do not exist
Answer: A. SNRR serves non-residents with bona fide India-related rupee transactions.
10 SNRR stands for:
A. Special Non-Resident Rupee (Account)
B. Standard National Reserve Rate
C. Secured Non-Repatriable Reserve
D. Simple Non-Resident Retirement
E. Statutory National Remittance Rule
Answer: A. SNRR = Special Non-Resident Rupee Account.
11 SNRR account balances are:
A. Repatriable
B. Never repatriable under any circumstance
C. Automatically converted to equity
D. Restricted to Indian residents only
E. Usable only for personal expenses
Answer: A. SNRR balances are repatriable.
đī¸ Property, Repatriation & Investment
12 NRIs are generally permitted to acquire in India:
A. Residential/commercial property, but not agricultural land, farmhouse or plantation property (without specific RBI approval)
B. Only agricultural land
C. No property of any kind
D. Only farmhouses
E. Property only in Union Territories
Answer: A. NRIs may acquire residential/commercial property but not agricultural land/farmhouse/plantation freely.
13 An NRI can create a charge on their Indian immovable property in favour of:
A. An Indian bank/AD as security for a rupee loan, subject to FEMA conditions
B. No one; NRIs cannot mortgage property in India
C. A foreign, unregulated lender freely
D. Only a relative, never a bank
E. Any random unregistered entity
Answer: A. NRIs can mortgage Indian property to a bank/AD, subject to FEMA rules.
14 Repatriation of property sale proceeds by an NRI is generally capped at:
A. The original foreign-currency investment, subject to conditions
B. Unlimited amounts regardless of original investment
C. Zero; repatriation of sale proceeds is banned entirely
D. A flat âš10,000 only
E. Only permitted for agricultural land
Answer: A. Repatriation is capped at the original foreign-currency investment.
15 NRIs can invest in Indian shares/mutual funds through:
A. The Portfolio Investment Scheme (PIS) route, where applicable, per FEMA regulations
B. No route exists for NRI investment
C. Only cash transactions with no documentation
D. Direct cryptocurrency purchase only
E. Barter arrangements
Answer: A. NRIs invest via the PIS route/FEMA-permitted channels.
đĩ Resident Foreign Currency Accounts
16 An RFC account is opened by:
A. A returning NRI, to hold foreign-currency assets/earnings brought back to India
B. A first-time resident who has never travelled abroad
C. Foreign banks operating in India
D. Minors exclusively
E. The RBI itself
Answer: A. RFC accounts are for returning NRIs' foreign-currency assets.
17 An EEFC account allows a resident exporter to:
A. Retain a portion of forex earnings in a foreign-currency account, avoiding repeated conversion
B. Hold only rupee deposits
C. Avoid all export documentation
D. Bypass GST on exports
E. Convert all earnings to gold
Answer: A. EEFC lets exporters retain forex without repeated conversion.
18 A resident deputed abroad for business purposes may, under specific FEMA permissions:
A. Hold a foreign currency account outside India for defined business purposes
B. Never hold any account outside India under any circumstance
C. Only hold rupee accounts abroad
D. Hold unlimited undeclared foreign accounts
E. Only invest in cryptocurrency abroad
Answer: A. Specific FEMA permissions allow deputed residents to hold FC accounts abroad.
19 A resident may acquire property abroad through:
A. The LRS limit, gift, inheritance, or an overseas office maintained abroad
B. No means whatsoever; residents cannot own foreign property
C. Only cash smuggled abroad
D. Only via a criminal violation of FEMA
E. Only if they renounce Indian citizenship first
Answer: A. LRS, gift, inheritance, or an overseas office are permitted routes.
đ FCRA, 2010
20 FCRA, 2010 regulates:
A. Acceptance and utilisation of foreign contributions by individuals, associations and companies in India
B. Domestic rupee deposits only
C. NRE account interest rates
D. ATM security
E. Cheque clearing timelines
Answer: A. FCRA regulates foreign contributions to Indian entities.
21 Entities receiving foreign contributions under FCRA must register with:
A. The Ministry of Home Affairs
B. SEBI
C. IRDAI
D. The local municipal corporation only
E. No registration is required
Answer: A. FCRA registration is with the Ministry of Home Affairs.
22 The designated FCRA bank account for receiving foreign contributions must be maintained at:
A. A specified branch of SBI, New Delhi
B. Any bank branch, anywhere in India, freely
C. A foreign bank branch only
D. A cooperative bank exclusively
E. No specific branch is prescribed
Answer: A. A specified SBI New Delhi branch is designated for FCRA accounts.
𧊠Mixed / Comprehensive
23 An NRI earning rental income from an Indian property they own would most appropriately deposit that income in:
A. An NRO account
B. An NRE account only
C. An FCNR(B) deposit
D. An SNRR account
E. No account is required for rental income
Answer: A. India-sourced rental income goes into an NRO account.
24 An NRI wanting to remit their overseas salary savings into a fully repatriable, tax-free Indian rupee deposit would use:
A. An NRE account
B. An NRO account
C. An EEFC account
D. An FCRA account
E. A resident savings account
Answer: A. Overseas earnings, fully repatriable and tax-free, go into NRE.
25 A returning NRI who wants to protect their overseas retirement benefits from immediate rupee conversion would open:
A. An RFC account
B. An SNRR account
C. An NRO account
D. An FCRA account
E. No account is available for this purpose
Answer: A. RFC accounts hold a returning NRI's foreign-currency assets.
26 An exporter who wants to avoid repeatedly converting export proceeds to and from rupees for future forex needs would use:
A. An EEFC account
B. An FCRA account
C. An SNRR account
D. An NRE account
E. No such facility exists
Answer: A. EEFC lets exporters retain forex without repeated conversion.
27 A foreign company with an India-based project needing a rupee account for local contract payments, without fitting any other NRI account category, would use:
A. An SNRR account
B. An NRE account (individual-only)
C. An FCRA account
D. No account is available for foreign companies
E. An EEFC account
Answer: A. SNRR fits non-resident entities' bona fide business transactions.
28 Which of the following best explains why NRE deposits are protected from India's tax net while NRO deposits are not?
A. NRE holds foreign-sourced income already earned/taxed abroad, while NRO holds India-sourced income which is taxable at source
B. There is no rational distinction; the treatment is arbitrary
C. NRO accounts are always tax-free too
D. NRE accounts are taxed at a higher rate than NRO
E. Tax treatment is identical for both account types
Answer: A. The source of income (foreign vs India) drives the tax distinction.
29 A tourist from the UK visiting India for three weeks would most plausibly need which type of account, if any, for a large local expense?
A. An NRO account for temporary visitors, or simply use cash/cards without opening an account
B. An FCNR(B) term deposit
C. An SNRR account
D. An RFC account
E. An EEFC account
Answer: A. A short-duration NRO account (or no account at all) suits a brief tourist visit.
30 Which of the following best captures why FCNR(B) is attractive to a risk-averse NRI compared to NRE?
A. FCNR(B) eliminates rupee depreciation risk since the deposit itself is held in foreign currency
B. FCNR(B) carries higher rupee depreciation risk than NRE
C. FCNR(B) and NRE have identical currency exposure
D. FCNR(B) is taxable while NRE is not, making it less attractive
E. FCNR(B) cannot be repatriated at all
Answer: A. FCNR(B)'s foreign-currency denomination removes rupee depreciation risk.
31 An NGO in India wanting to accept a foreign donation must, before receiving it:
A. Register under FCRA and route the donation through its designated FCRA account
B. Simply deposit it into any regular savings account
C. Convert the donation to gold immediately
D. Avoid any regulatory step, since FCRA doesn't apply to NGOs
E. Route it through an NRE account
Answer: A. FCRA registration and a designated account are required before accepting foreign donations.
32 Which of the following would most plausibly require RBI's specific prior approval for an NRI, unlike standard residential property purchase?
A. Acquisition of agricultural land in India
B. Purchase of a city apartment
C. Purchase of a commercial office space
D. Opening an NRE savings account
E. Opening an NRO account
Answer: A. Agricultural land acquisition needs specific RBI approval for NRIs.
33 Which of the following statements about the SNRR account's alignment requirement is TRUE?
A. The account must be aligned to the actual contract/business purpose it services
B. SNRR accounts have no purpose restrictions at all
C. SNRR accounts can be used for any purpose, including personal savings unrelated to any business
D. SNRR accounts require no documentation whatsoever
E. SNRR accounts are identical to NRE accounts in every respect
Answer: A. SNRR usage must align with the underlying business/contract purpose.
34 Which of the following best describes the CA certification requirement often seen in NRO repatriation?
A. A Chartered Accountant certifies that applicable taxes have been paid on the funds being repatriated
B. CA certification is never required for NRO repatriation
C. Only a notary, never a CA, can certify repatriation
D. CA certification applies only to NRE accounts
E. CA certification is required only for amounts below âš1,000
Answer: A. CA certification confirms tax compliance before NRO repatriation.
35 Which of the following best explains why banks apply "enhanced KYC" to foreign nationals opening accounts in India?
C. Foreign nationals are exempt from all KYC requirements
D. Enhanced KYC applies only to Indian residents
E. Enhanced KYC is a marketing gimmick with no compliance purpose
Answer: A. Enhanced KYC addresses elevated cross-border AML/CFT risk.
36 A resident Indian professional deputed to a foreign branch office for two years, receiving a local salary there, would most plausibly use which account to manage those foreign earnings?
A. A foreign currency account outside India, permitted under specific FEMA rules for deputed residents
B. An NRE account, reserved for non-residents
C. An FCRA account
D. An SNRR account
E. No account can be used; all foreign earnings must be repatriated daily
Answer: A. Deputed residents may use a permitted foreign account abroad for local earnings.
37 Which of the following best summarises why banks must closely monitor FCRA-linked account flows?
A. To ensure foreign contributions are only credited to FCRA-registered, designated accounts and not diverted or misused
B. Banks have no monitoring role under FCRA
C. FCRA applies only to for-profit companies, not NGOs
D. FCRA accounts require no reporting to any authority
E. Monitoring applies only to domestic rupee transfers
Answer: A. Banks ensure foreign contributions flow only to designated, registered FCRA accounts.
38 Which of the following would be an accurate distinction between the PIS route and general FEMA-permitted investment routes for NRIs?
A. PIS specifically governs NRI investment in listed Indian shares/debentures through designated bank-linked accounts
B. PIS applies only to real estate investment
C. PIS is unrelated to any NRI investment activity
D. PIS is a scheme exclusively for resident Indians
E. PIS eliminates the need for any FEMA compliance
Answer: A. PIS specifically channels NRI investment into listed Indian securities.
39 Which of the following would be the most likely consequence of a bank crediting a foreign donation into an NGO's non-designated (non-FCRA) account?
A. It would violate FCRA norms and expose both the NGO and the bank to regulatory action
B. It would have no consequence at all
C. It would automatically convert the account into an FCRA account
D. It is the standard, encouraged practice
E. It would only affect the donor, never the recipient or bank
Answer: A. Crediting foreign donations to a non-designated account violates FCRA norms.
40 Which of the following best explains the two-residential-property limit often applied to NRI sale-proceeds repatriation?
A. It caps how many residential properties' sale proceeds an NRI can repatriate in a lifetime, per FEMA/RBI rules
B. It limits how many properties an NRI may ever own in India
C. It applies only to agricultural land
D. It has no connection to repatriation
E. It is a tax exemption limit, unrelated to FEMA
Answer: A. The limit caps repatriable sale proceeds to (typically) two residential properties.
41 Which of the following is TRUE regarding a Person of Indian Origin (PIO) compared to a foreign national with no Indian origin?
A. PIOs generally enjoy broader account-opening and property-acquisition privileges akin to NRIs
B. PIOs and unrelated foreign nationals are treated identically in every respect
C. PIOs cannot open any account in India
D. PIOs are barred from property acquisition entirely
E. PIO status has no bearing on banking privileges
Answer: A. PIOs typically get NRI-like account/property privileges.
42 Which of the following best describes why an NRI might prefer an NRO over an NRE account despite NRE's tax advantage?
A. If the funds originate from India-sourced income (e.g. rent), NRO is the mandatory/appropriate account regardless of tax treatment
B. NRO always offers better tax treatment than NRE
C. There is never a valid reason to use NRO over NRE
D. NRE accounts cannot hold any funds at all
E. NRO accounts are reserved only for resident Indians
Answer: A. India-sourced income must go into NRO, regardless of NRE's tax perks.
43 Which of the following would be an appropriate account for a resident Indian who received a foreign-currency inheritance from abroad and wants to hold it without immediate rupee conversion?
A. An RFC account
B. An NRE account, reserved for non-residents
C. An SNRR account
D. An FCRA account
E. No such facility exists for residents
Answer: A. RFC accounts let residents hold foreign-currency assets like inheritances.
44 Which of the following statements about FCNR(B) tenure is generally accurate?
A. FCNR(B) deposits are term deposits with fixed tenures (typically 1 to 5 years)
B. FCNR(B) is a demand deposit payable on demand with no tenure
C. FCNR(B) has no maximum tenure limit at all
D. FCNR(B) tenure is always exactly 10 years
E. FCNR(B) deposits cannot be renewed
Answer: A. FCNR(B) is a fixed-tenure term deposit (typically 1-5 years).
45 Which of the following best captures the overall regulatory theme linking NRI accounts, resident FC accounts, and FCRA?
A. All three regulate cross-border money flows involving India, balancing individual/entity convenience against systemic and national-interest oversight
B. They are entirely unrelated regulatory regimes with no common thread
C. Only FCRA involves any cross-border element; NRI/FC accounts are purely domestic
D. These topics apply only to corporate entities, never individuals
E. None of these regimes involve RBI in any capacity
Answer: A. All three regulate cross-border flows, balancing convenience with oversight.
46 Which of the following would NOT typically be permitted funding for an EEFC account?
A. Domestic rupee sales proceeds unrelated to any export activity
B. Foreign exchange earned from export of goods
C. Foreign exchange earned from export of services
D. Advance remittance received for exports
E. Foreign exchange earned by a 100% EOU
Answer: A. EEFC is funded from genuine forex earnings, not domestic rupee sales.
47 Which of the following best explains why an NRI's NRE fixed deposit interest being tax-free matters for India's remittance inflows?
A. It incentivises NRIs to remit and park savings in India rather than abroad, supporting forex inflows
B. Tax treatment has no bearing on remittance behaviour
C. NRE tax-free status discourages remittances into India
D. Tax-free interest applies only to non-NRI residents
E. This has no connection to India's balance of payments
Answer: A. Tax-free NRE interest incentivises remittance inflows into India.
48 Which of the following would be the correct account for a US-based PIO wanting to invest in an Indian mutual fund on a repatriable basis?
A. Investment routed via an NRE account or the applicable FEMA-permitted repatriable route
B. An EEFC account, meant for exporters
C. An FCRA account, meant for foreign contributions to NGOs
D. No route exists for PIOs to invest in Indian mutual funds
E. Only a resident savings account can be used
Answer: A. NRE-linked/repatriable routes support PIO mutual fund investment.
49 Which of the following best describes why RBI restricts NRI investment in agricultural land specifically, more than other property types?
A. Agricultural land carries sensitive domestic land-ownership and food-security considerations beyond ordinary commercial property
B. Agricultural land has no special regulatory status compared to commercial property
C. NRIs are entirely free to buy agricultural land with no restriction
D. This restriction applies only to foreign nationals, never NRIs
E. Agricultural land restrictions were abolished in 2020
Answer: A. Agricultural land carries distinct domestic policy sensitivities.
50 Overall, which statement best summarises this topic?
A. NRE/NRO/FCNR(B)/SNRR accounts serve different non-resident needs (repatriable savings, India income, currency protection, business transactions respectively), NRIs face specific property/repatriation rules, RFC/EEFC serve resident foreign-currency holders, and FCRA governs foreign contributions through a designated account â together forming India's cross-border individual banking framework
B. All NRI account types are functionally identical with no distinctions
C. Only residents, never non-residents, can hold any foreign-currency-linked account in India
D. FCRA governs NRI property acquisition
E. RFC and EEFC accounts are meant exclusively for non-residents
Answer: A. This correctly captures the full NRI/foreign-currency account framework.
Disclaimer: This article is prepared for educational and exam-preparation purposes only, summarising NRI and foreign currency account rules as of September 2026. Candidates should cross-check the latest official IIBF syllabus and RBI Master Directions before the exam.