Foreign Accounts in India: NRE, NRO & FCNR(B) Explained

Add as a preferred source on Google
Published on 8 October 2026 by

Foreign Accounts in India is an important topic in Banking Awareness for candidates preparing for IBPS PO, IBPS Clerk, IBPS RRB, SBI, RBI, and other competitive examinations. Questions commonly cover accounts available to Non-Resident Indians (NRIs), their currencies, repatriation rules, taxation, and permitted transactions. The three major NRI banking accounts are the Non-Resident External (NRE) Account, Non-Resident Ordinary (NRO) Account, and Foreign Currency Non-Resident (Bank) [FCNR(B)] Account. Candidates should understand their differences to answer account-related MCQs accurately.

Types of Foreign Accounts in India

Indian banks offer different account facilities depending on the customer’s residential status, source of funds, currency requirements, and intended transactions. The following table summarises the major accounts relevant to banking examinations.

Account TypeFull FormCurrencyMain Purpose
NRE AccountNon-Resident External AccountIndian rupeesHolds eligible foreign earnings remitted to India
NRO AccountNon-Resident Ordinary AccountIndian rupeesManages income earned or received in India, such as rent, pension, and dividends
FCNR(B) AccountForeign Currency Non-Resident (Bank) AccountPermitted foreign currenciesHolds eligible foreign currency deposits without converting the principal into Indian rupees
RFC AccountResident Foreign Currency AccountPermitted foreign currenciesAllows eligible returning residents to maintain certain foreign currency funds
EEFC AccountExchange Earners’ Foreign Currency AccountPermitted foreign currenciesAllows eligible residents to hold certain foreign exchange earnings in foreign currency
download banking awareness free PDF

NRE Account: Non-Resident External Account

An NRE account is an Indian rupee-denominated account that eligible NRIs can use to deposit foreign earnings remitted to India. It may be maintained as a savings, current, recurring, or fixed deposit account, subject to applicable banking rules. Both principal and interest are generally repatriable, subject to applicable regulations. Interest on eligible NRE accounts is generally exempt from Indian income tax while the account holder satisfies the relevant non-resident conditions.

  • The account is maintained in Indian rupees.
  • Eligible foreign funds are converted into Indian rupees when deposited.
  • Both principal and interest are generally repatriable.
  • It can be used for eligible transactions in India.
  • It is commonly used to manage foreign earnings transferred to India.

NRO Account: Non-Resident Ordinary Account

An NRO account is used by eligible non-residents to manage income received in India, such as rent, dividends, pension, and other permitted receipts. It is maintained in Indian rupees and may be opened as a savings, current, recurring, or fixed deposit account, subject to applicable rules. Repatriation of eligible balances is subject to regulatory limits, documentation, and applicable tax requirements.

  • The account is maintained in Indian rupees.
  • It is suitable for managing income earned or received in India.
  • Interest is generally taxable in India, subject to applicable law and tax treaty provisions.
  • Repatriation is subject to applicable FEMA and RBI rules.
  • Eligible resident accounts may need to be redesignated when the account holder’s residential status changes.

FCNR(B) Account: Foreign Currency Non-Resident Account

An FCNR(B) account allows eligible NRIs to maintain term deposits in permitted foreign currencies. Unlike NRE and NRO accounts, which are denominated in Indian rupees, an FCNR(B) deposit is maintained in a permitted foreign currency, helping the account holder avoid direct currency conversion of the principal into rupees when the deposit is opened.

  • Deposits are maintained in permitted foreign currencies.
  • The facility is for term deposits rather than ordinary savings accounts.
  • Eligible principal and interest are generally repatriable.
  • The account can help reduce exposure to fluctuations between the deposit currency and the Indian rupee.
  • Interest and eligibility conditions depend on applicable regulations and the bank’s terms.
Important Codes Used in Banking

Difference Between NRE, NRO and FCNR(B) Accounts

The following comparison is particularly useful for competitive examinations because questions often ask candidates to identify the correct account based on its currency, purpose, or repatriation rules.

FeatureNRE AccountNRO AccountFCNR(B) Account
CurrencyIndian rupeesIndian rupeesPermitted foreign currency
Main purposeEligible foreign earnings remitted to IndiaIncome received in IndiaForeign currency term deposits
Interest taxation in IndiaGenerally exempt if eligibility conditions are metGenerally taxable, subject to applicable provisionsGenerally exempt if eligibility conditions are met
RepatriationPrincipal and interest generally repatriableSubject to applicable limits and conditionsPrincipal and interest generally repatriable
Account typeSavings, current, recurring, or fixed deposit, subject to rulesSavings, current, recurring, or fixed deposit, subject to rulesTerm deposit
Main distinctionRupee account for eligible foreign earningsRupee account for Indian incomeForeign currency term deposit

Important MCQs on Foreign Accounts in India

Practise these questions to revise the differences between NRE, NRO, and FCNR(B) accounts.

Q1. What is the full form of NRE?

A. Non-Resident External
B. National Reserve Exchange
C. Non-Resident Earnings
D. National Remittance Entity

Answer: A. Non-Resident External

Q2. Which account is primarily used by NRIs to manage income received in India?

A. NRE Account
B. NRO Account
C. FCNR(B) Account
D. EEFC Account

Answer: B. NRO Account

Q3. Which account is maintained in permitted foreign currencies?

A. NRE Account
B. NRO Account
C. FCNR(B) Account
D. Ordinary resident savings account

Answer: C. FCNR(B) Account

Q4. Which of the following is an Indian rupee-denominated account?

A. FCNR(B) only
B. NRE and NRO
C. EEFC only
D. RFC only

Answer: B. NRE and NRO

Q5. Which account is generally used to receive eligible foreign earnings in India with repatriable principal and interest?

A. NRO Account
B. NRE Account
C. Ordinary resident account
D. Cash credit account

Answer: B. NRE Account

Q6. Which account is designed for eligible foreign currency term deposits by NRIs?

A. NRO Account
B. NRE Account
C. FCNR(B) Account
D. Current rupee account

Answer: C. FCNR(B) Account

Q7. What is the full form of NRO?

A. Non-Resident Ordinary
B. National Remittance Order
C. Non-Resident Overseas
D. Non-Resident Organisation

Answer: A. Non-Resident Ordinary

Q8. Which account is associated with eligible residents holding certain foreign exchange earnings?

A. NRO Account
B. EEFC Account
C. NRE Account
D. FCNR(B) Account

Answer: B. EEFC Account

How to Prepare Foreign Accounts in India for Banking Exams?

Candidates should prepare NRE, NRO, and FCNR(B) accounts together because examination questions frequently test their differences. Memorise each account’s full form, currency, purpose, repatriation rules, and general tax treatment. Also revise RFC and EEFC accounts for additional coverage. Use short comparison tables and MCQs for repeated revision, and consult official RBI guidance or bank documentation when checking regulatory details. For additional Banking Awareness preparation, refer to Oliveboard’s IBPS RRB General Awareness and Financial Awareness resource and How to Prepare for General Awareness guide.

Free Exam Preparation PDFsDownload Link
Last 6 Months’ Current Affairs in Hindi & EnglishClick Here
Monthly Current AffairsClick Here
Weekly Current AffairsClick Here
Daily Current AffairsClick Here
Banking and Financial AwarenessClick Here
100 Important Banking TermsClick Here
Speed Math KitClick Here