The Reserve Bank of India (RBI) had decided to discontinue rupee schemes of non-Resident Non-Repatriable account (NRNR) and NonResident (Special) account (NRSR) with effect from 1 April 2002 in extension of its earlier circular to bring these schemes under full convertibility.
RBI had issued a notification on 4 March 2002, allowing full convertibility of deposit schemes of NRJs like NRNR and NRSR accounts with effect from 1 April 2002. Accordingly, banks were asked not to accept fresh deposits or open any fresh account, by way of renewal or otherwise, under these two schemes. The decision to discontinue was intended to rationalise the existing non-resident deposit schemes, RBI said in the notification. The existing accounts under NRNR and NRSR would be allowed to continue only up to the date of maturity. However, other than term-deposits under NRSR account should not be continued after 30 September 2002.
The maturity proceeds of the deposits under NRNR should be credited to the account-holder’s Non-Resident (External) account (NRE), after giving notice to the account-holder, RBI told banks. Thus, the existing term deposits will carry interest at the contracted rate till date of maturity.
However, the account-holder may choose to credit the maturity proceeds to his NRE savings account or current account or open a fresh NRE term deposit account, and banks can also permit the account- holder to credit them to Non-Resident (Ordinary) account (NRO).
NRNR account-holders have the option to directly credit maturity proceeds to NRE account, but not to Foreign Currency (Non-Resident) Accounts (Banks) scheme (FCNR-B).
The proceeds of NRNR deposits can be credited to NRE account only on maturity, and, in case of premature withdrawal, they should be credited only to NRO account.
For the latest relaxations, please make a reference to the Reserve Bank of India.