The Reserve Bank of India (RBI) has allowed non-resident Indians (NRIs) to transfer funds from non-resident ordinary (NRO) account to non-resident external (NRE) account subject to a ceiling of $1million in a financial year.
The central bank in a notification said, “It has been decided that henceforth NRI... shall be eligible to transfer funds from NRO account to NRE account from within the overall ceiling of $1 million per financial year subject to payment of tax.”
According to the existing regulation, fund transfer from NRE account to NRO was allowed, but transfer of funds from NRO to NRE account is not permissible.
An NRE account is for depositing income from abroad and an NRO account is mainly for putting Indian incomes. The decision came after KJ Udeshi committee recommendation to facilitate persons under Foreign Exchange Management Act ( FEMA), 1999.