Bank accounts for NRI / PIO / OCI:
An NRI / PIO / OCI can open 3 types of accounts in India:
a) NRE account i.e. Non-resident External account: It is a rupee dominated account and the funds in the said account are freely repatriable. It can be a savings account, recurring deposit or a fixed deposit. The rate of interest on NRE accounts are usually less compared to NRO accounts. However, interest earned on NRE accounts is tax free in India.
b) NRO i.e. Non-resident Ordinary account: It is also a rupee dominated account but the funds are not freely repatriable. All the incomes earned / accrued in India have to be deposited in this account. It can be a savings account, recurring deposit or a fixed deposit. The rate of interest on NRO accounts is generally at par with the resident accounts. Interest earned on NRO accounts is taxable in India.
c) FCNR (B) i.e Foreign currency Non-resident (Banks) account: It can only be opened in foreign currency. NRIs invest their funds in FCNR(B) accounts as interest rates are higher in India compared to with an aim to avoid the currency fluctuation risk.Bank accounts for foreign citizens (not an NRI / PIO / OCI):In case of a foreign citizen, if he is a resident in India as per FEMA guidelines, then he can open a resident bank account in India, which on return to his origin country is redesignated as NRO account.If a foreign citizen is on a temporary visit to India (like travel etc.,) he can open a temporary NRO account for expenses here in India, for a maximum period of six months. RBI permission is required to hold such accounts for more than six months.