Regulations 6 and 7 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
This is the second half of the Deposit Regulations. Schedule 3 is the Non-Resident (Ordinary) rupee account, Schedule 4 the Special Non-Resident Rupee (SNRR) account, Schedule 5 the escrow account, and Schedules 6 and 7 deposits with Indian companies and firms. Regulations 6 and 7 deal with deposits taken by persons other than banks and with other accounts. Each condition below is taken from the Master Direction - Deposits and Accounts.
This article reads the Foreign Exchange Management (Deposit) Regulations, 2016 (Notification No. FEMA 5(R)/2016-RB, G.S.R. 389(E), 1-4-2016) for structure, as per the copy consulted, a third-party print as notified with no amendment notes. Every condition is taken from the Master Direction - Deposits and Accounts (FED Master Direction No. 14/2015-16), updated as on September 02, 2026, and the Fifth Amendment (January 14, 2025) and Sixth Amendment (June 18, 2026) Regulations are read. Balances in an NRO account cannot be repatriated abroad except by NRIs and PIOs up to USD 1 million, subject to the Remittance of Assets Regulations, 2016. An SNRR account earns no interest. An Indian company cannot accept deposits on repatriation basis.
Authority and the texts
The preamble cites "clause (f) of sub-section (3) of section 6, sub-section (2) of section 47" of the Foreign Exchange Management Act, 1999. The Act text now prints section 6(3) as omitted, and section 47(3) keeps earlier Reserve Bank regulations in force until amended or rescinded. See the Act articles on section 6 and sections 47 and 48. The Master Direction's appendix lists amendments of November 9, 2018, July 16, 2019 and November 13, 2019 that the copy of the Regulations does not carry and that are not otherwise in the sources consulted. The Master Direction is the Reserve Bank's direction to authorised dealers under section 11. The first part of the Schedules (NRE and FCNR(B)) is in the previous article. For the tax filing of NRIs holding these accounts, see our NRI tax filing service and income-tax guides.
Schedule 3: NRO account (Master Direction paragraph 6)
| Feature | As the Master Direction prints it |
|---|---|
| Who | Any person resident outside India may open an NRO account with an authorised dealer or authorised bank for bona fide transactions denominated in Indian Rupees; Post Offices may keep savings accounts on the same terms |
| Visitors | A foreign national of non-Indian origin visiting India may open a current or savings NRO account; the balance may be paid to the holder on departure if the account has been kept for no more than six months and has had no local credit other than interest |
| Certain countries | Opening by individuals or entities of Pakistan nationality or ownership, and entities of Bangladesh ownership, needs the Reserve Bank's prior approval; Bangladesh individuals need a valid visa and residential permit; the paragraph also provides for one NRO account for minority-community citizens of Bangladesh or Pakistan holding a Long Term Visa, with quarterly reporting to the Ministry of Home Affairs |
| Form and joint holding | Any form; jointly with residents on "former or survivor" basis; NRIs and PIOs may hold jointly with other NRIs and PIOs |
| Credits | Inward remittances from outside India, legitimate dues in India and transfers from other NRO accounts; a rupee gift or loan made by a resident to an NRI or PIO relative within the Liberalised Remittance Scheme limits may be credited |
| Debits | Local payments, transfers to other NRO accounts, remittance of current income abroad |
| Repatriation | Apart from these, balances cannot be repatriated abroad except by NRIs and PIOs up to USD 1 million, subject to the Remittance of Assets Regulations, 2016; funds can be transferred to NRE and SNRR accounts within that USD 1 million facility |
| Loans | Against deposits, to the holder or a third party in India, on usual norms and margin; not for relending, agriculture or plantation, or real estate |
| Status change | Designated as a resident account on return to India for an uncertain stay; a resident who becomes non-resident has the existing account designated NRO |
| Power of Attorney | Operations restricted to local payments and remittances to non-residents |
| Pending dues | A foreign national leaving India may re-designate a resident account as NRO to receive bona fide dues, repatriating up to USD one million per financial year, and the account is closed afterwards |
The Master Direction (paragraph 6.14) also says remittances are net of taxes on production of the information in the formats the Central Board of Direct Taxes prescribes, and that the Reserve Bank will not issue FEMA instructions clarifying tax issues. The copy of Schedule 3 says balances are not remittable without general or specific approval of the Reserve Bank; it does not print the USD 1 million facility, and the Master Direction is followed.
Schedule 4: SNRR account (Master Direction paragraph 7)
A person resident outside India may open an SNRR account with an authorised dealer in India or its branch outside India, including in an IFSC in India, for permissible current and capital account transactions with a resident under the Act, Rules and Regulations, and for any bona fide transaction with a person resident outside India (paragraph 7.1, as substituted by the Sixth Amendment). The conditions: the account earns no interest (7.2); operations must not result in the holder making foreign exchange available to a resident against reimbursement in rupees (7.6); balances in the account in India are eligible for repatriation, and transfers from an NRO account to an SNRR account follow paragraph 6.8 (7.7); transactions are subject to applicable taxes in India (7.8); the account may be designated resident on the holder becoming a resident (7.9); a non-resident nominee's amount is credited to an NRO or NRE account or remitted through banking channels (7.10); opening by Pakistan and Bangladesh nationals and entities needs the Reserve Bank's prior approval (7.11); and transactions between non-residents that may not be subject to compliance under the Act are effected by the bank on the account holder's mandate indicating the underlying purpose (7.12). Paragraphs 7.3 to 7.5 are printed blank, their earlier text having been deleted. Conditions in Schedule 4 of the copy that the Master Direction does not repeat (such as the nomenclature and tenure rules) are left out.
Schedule 5: escrow account (paragraph 8)
Resident or non-resident corporates or acquirers may open an escrow account in rupees with an authorised dealer as escrow agent, subject to Schedule 5 (8.1). Transactions follow the Non-Debt Instruments Rules, 2019 and SEBI regulations (8.2); the Rules are not in the sources consulted. The account is non-interest bearing (8.3), and no fund or non-fund based facility is permitted against the balances (8.4). The copy of Schedule 5 has further conditions (credits, debits, a six-month limit) that the Master Direction does not repeat; they are not stated here.
Regulations 6 and Schedules 6 and 7: deposits with Indian companies (paragraphs 9, 10 and 11)
Regulation 6(1) bars a company registered under the Companies Act, 2013 or a body corporate created by an Act from accepting deposits on repatriation basis from an NRI or PIO, but lets it renew those already accepted under Schedule 6. Paragraph 9 of the Master Direction says the same of a company incorporated in India, including a registered NBFC. Regulation 6(2) and paragraph 10.1 allow an Indian proprietorship concern, firm or company (including a registered NBFC) to accept deposits from NRIs or PIOs on non-repatriation basis, subject to Schedule 7. The Master Direction does not repeat the terms of Schedules 6 and 7, so they are not stated here. Regulation 6(3) of the copy deals with commercial paper; paragraph 10.2 of the Master Direction is blank, its text having been deleted by the amendment of July 16, 2019. Paragraph 11 adds that deposits by a person resident outside India with an Indian company under section 160 of the Companies Act, 2013 (nomination as director) are a current account transaction needing no Reserve Bank approval, and so are the refunds if the person is selected or gets more than twenty five percent votes.
Regulation 7: other accounts (paragraph 12)
- 12.1 A deposit by an authorised dealer with its branch, head office or correspondent outside India, and deposits by overseas branches held in India, follow the Reserve Bank's directions.
- 12.2 A shipping or airline company incorporated outside India may keep a Foreign Currency Account for local expenses in India; credits are only freight or passage fare collections in India or inward remittances from its office outside India.
- 12.3 Authorised dealers may allow unincorporated joint ventures of foreign entities with Indian entities, executing a contract in India, a non-interest bearing foreign currency account and an SNRR account; debits and credits incidental to the business; tenure concurrent with the contract; Pakistan or Bangladesh entities need prior Reserve Bank approval.
- 12.4 An authorised dealer may allow a SEBI-registered FPI and FVCI a non-interest bearing foreign currency account for investment under the Non-debt Instruments Rules and the Debt Instruments Regulations. Regulation 7(4) of the copy (an account for adjusting imports against exports) is not in the Master Direction and is left out.
Example
Daniel Rego, an invented NRI, keeps an NRO account into which his tenant pays rent. Under paragraph 6.8 he may remit the current income abroad and, within USD 1 million, other balances under the Remittance of Assets Regulations, 2016. An overseas trading firm opens an SNRR account to pay an Indian supplier; the account earns no interest and the firm may not use it to make foreign exchange available to a resident against rupees. A small Indian company wants to take a deposit from Daniel: if it is a company it can accept it only on non-repatriation basis under Schedule 7.
Our guides on the NRO account and on NRE and NRO differences give wider context. Later amendments and circulars should be checked.
Need help with NRO and other non-resident accounts?
Repatriation limits, SNRR purposes and company deposits each turn on the Master Direction's conditions and later circulars. Our NRI tax filing team can look at the account structure and the tax position together.
Key takeaways
- NRO balances are not repatriable except current income and, for NRIs and PIOs, up to USD 1 million per the Remittance of Assets Regulations, 2016.
- An SNRR account earns no interest and cannot be used to give foreign exchange to a resident against rupees.
- Escrow accounts are in rupees, non-interest bearing and carry no facilities against balances.
- An Indian company cannot accept deposits on repatriation basis; non-repatriation deposits are allowed under Schedule 7.
- Conditions found only in the copy of the Regulations and not in the Master Direction are left out.
Read next
- NRE and FCNR(B) accounts: Schedules 1 and 2
- EEFC, RFC and other accounts in India
- NRO account features, TDS and repatriation
- NRI accounts: NRE, NRO and FCNR
Disclaimer: Based on the rules, regulations and Reserve Bank Master Directions under the Foreign Exchange Management Act, 1999 that this article names, each in the version and up to the date stated in the article, as consulted on 2 October 2026. Some texts are third-party copies or older prints and are identified as such. Limits, forms and time limits change by amendment and circular; later changes should be checked on the Reserve Bank and Gazette sites. This article is general information, not legal advice; check the official text before acting.