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NRI Banking – 17 Most Expected Questions ⏳ Updated: Apr 2026 | 🎯 17 MCQs
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Siddharth moves to the UK for employment, and opens a Non-Resident External (NRE) account in India, to manage his finances. He seeks clarification on the account's features.
Which of the following statements, regarding his NRE account, are correct?
1. The funds he remits from the UK to this account are fully repatriable, back to the UK.
2. The interest earned on his NRE savings is exempt from Income Tax, in India.
3. He can freely transfer funds, from his existing FCNR(B) account, into this NRE account.
4. He can deposit his rental income, earned from a property in Mumbai, into this account.
Which of the following statements, regarding his NRE account, are correct?
1. The funds he remits from the UK to this account are fully repatriable, back to the UK.
2. The interest earned on his NRE savings is exempt from Income Tax, in India.
3. He can freely transfer funds, from his existing FCNR(B) account, into this NRE account.
4. He can deposit his rental income, earned from a property in Mumbai, into this account.
Explanation:
Correct: A
NRE accounts allow full repatriation. Interest is tax-free in India. Permissible credits include inward remittances and transfers from NRE/FCNR(B). Local income like rent must go to an NRO account.
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Arjun, an NRI based in Dubai, wishes to involve his family in India, in managing his NRE account. He wants to add his resident father as a joint holder, and give a Power of Attorney (POA) to his brother.
Which of the following arrangements are permitted, by RBI regulations?
1. He can add his resident father as a joint holder, on a "Former or Survivor" basis.
2. He can add his resident father, as the primary (first) account holder.
3. His brother (the POA holder) can use the account, to make local rupee payments, for Arjun's family in India.
4. His brother (the POA holder) can freely repatriate funds from the account, to Arjun in Dubai.
Which of the following arrangements are permitted, by RBI regulations?
1. He can add his resident father as a joint holder, on a "Former or Survivor" basis.
2. He can add his resident father, as the primary (first) account holder.
3. His brother (the POA holder) can use the account, to make local rupee payments, for Arjun's family in India.
4. His brother (the POA holder) can freely repatriate funds from the account, to Arjun in Dubai.
Explanation:
Correct: B
An NRI can hold an NRE account jointly with a resident relative only on a "Former or Survivor" basis. The NRI must be the primary holder. A resident POA holder can make local payments but generally cannot repatriate funds.
▶ Watch Video Explanation
Mr. Sharma, an NRI, visits his bank in Delhi, with four different cheques he wishes to deposit into his NRE account.
Which of the following cheques will the bank REJECT, based on NRE permissible credit rules?
1. A cheque for monthly rent, received from his tenant in Delhi.
2. A dividend warrant from an Indian company, for shares held on a non-repatriable basis.
3. A cheque representing proceeds, from his local business in India.
4. A foreign currency draft, brought from abroad during his visit.
Select the correct answer using the code given below:
Which of the following cheques will the bank REJECT, based on NRE permissible credit rules?
1. A cheque for monthly rent, received from his tenant in Delhi.
2. A dividend warrant from an Indian company, for shares held on a non-repatriable basis.
3. A cheque representing proceeds, from his local business in India.
4. A foreign currency draft, brought from abroad during his visit.
Select the correct answer using the code given below:
Explanation:
Correct: C
NRE accounts are for foreign earnings. Local income like rent, dividends, and business proceeds must go to an NRO account. Only the foreign currency draft is a permissible credit.
▶ Watch Video Explanation
Rahul, an NRI, arrives in India for a vacation, carrying USD 6,000 in cash. He wishes to deposit this cash into his NRE account.
Which of the following statements correctly describe, the banking procedure?
1. The bank can accept the foreign currency notes, for deposit into the NRE account.
2. Rahul must provide a Currency Declaration Form (CDF) to the bank, since the amount exceeds the specific custom threshold for notes.
3. The bank will credit the account in USD, without converting it to Rupees.
4. If Rahul had brought Indian Rupee cash from abroad, he could not deposit it into the NRE account.
Which of the following statements correctly describe, the banking procedure?
1. The bank can accept the foreign currency notes, for deposit into the NRE account.
2. Rahul must provide a Currency Declaration Form (CDF) to the bank, since the amount exceeds the specific custom threshold for notes.
3. The bank will credit the account in USD, without converting it to Rupees.
4. If Rahul had brought Indian Rupee cash from abroad, he could not deposit it into the NRE account.
Explanation:
Correct: A
Banks accept foreign notes for NRE deposits. CDF is mandatory if currency notes exceed USD 5,000 or total cash/TCs exceed USD 10,000. NRE accounts are maintained in Rupees, so conversion happens immediately.
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Vikram holds an NRE Fixed Deposit (FD), for a 3-year term. Due to a medical emergency, he requests the bank to close the FD, after only 8 months. What will be the impact, on the interest payable?
Explanation:
Correct: C
For NRE Term Deposits, no interest is payable if the deposit is closed before completing the minimum period of one year. The principal remains repatriable.
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Anita, who has held an NRE account for years, returns to India, and takes up permanent employment, staying for more than 182 days. She informs her bank, of her change in residency status. What happens to her existing NRE deposits?
1. Her NRE savings account must be re-designated as a resident account, or Resident Foreign Currency (RFC) account.
2. Her existing NRE Fixed Deposits can continue to run until maturity, at the originally contracted interest rate.
3. The interest earned on these deposits will now become taxable in India.
4. She must immediately close all accounts, and withdraw the cash.
1. Her NRE savings account must be re-designated as a resident account, or Resident Foreign Currency (RFC) account.
2. Her existing NRE Fixed Deposits can continue to run until maturity, at the originally contracted interest rate.
3. The interest earned on these deposits will now become taxable in India.
4. She must immediately close all accounts, and withdraw the cash.
Explanation:
Correct: C
On becoming a resident, NRE savings must be re-designated as resident/RFC. Existing FDs can run to maturity at the contracted rate, but interest becomes taxable.
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Karan, an NRI based in the UK, has several sources of funds, he wishes to manage in India. He decides to open an NRO (Non-Resident Ordinary) account.
Which of the following transactions are permissible credits to this NRO account, under RBI regulations?
1. Monthly rental income, received from his apartment in Mumbai.
2. Pension payments, received from his former employer in India.
3. A transfer of funds, from his existing NRE account, to this NRO account.
4. Direct deposit of his salary earned in the UK, into this NRO account.
Which of the following transactions are permissible credits to this NRO account, under RBI regulations?
1. Monthly rental income, received from his apartment in Mumbai.
2. Pension payments, received from his former employer in India.
3. A transfer of funds, from his existing NRE account, to this NRO account.
4. Direct deposit of his salary earned in the UK, into this NRO account.
Explanation:
Correct: B
NRO accounts are for managing Indian-sourced income like rent and pension. Transfers from NRE to NRO are allowed. Foreign salary is permissible but ideally goes to NRE for repatriation benefits.
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Dev, an NRI, sells a residential property in Bangalore for ₹80 lakhs. He wishes to repatriate the sale proceeds to the USA. He consults his tax advisor, regarding the procedure.
Which of the following statements are correct?
1. The sale proceeds must be credited to his NRO account; they cannot be credited, directly to an NRE account.
2. He can repatriate up to USD 1 million per financial year, from his NRO account balances.
3. He must submit Form 15CA, and a Chartered Accountant’s certificate (Form 15CB), to ensure tax compliance.
4. He can repatriate the full amount, without any limit or documentation, since it is a capital receipt.
Which of the following statements are correct?
1. The sale proceeds must be credited to his NRO account; they cannot be credited, directly to an NRE account.
2. He can repatriate up to USD 1 million per financial year, from his NRO account balances.
3. He must submit Form 15CA, and a Chartered Accountant’s certificate (Form 15CB), to ensure tax compliance.
4. He can repatriate the full amount, without any limit or documentation, since it is a capital receipt.
Explanation:
Correct: A
Property sale proceeds are capital receipts credited to NRO. Repatriation is limited to USD 1 million per FY. Tax clearance via Forms 15CA and 15CB is mandatory.
▶ Watch Video Explanation
Priya, an NRI living in Singapore, holds both an NRE Fixed Deposit, and an NRO Fixed Deposit in India. She notices a difference, in the tax treatment of the interest earned.
Which of the following statements, accurately reflect the tax rules?
1. Interest earned on her NRO Fixed Deposit, is fully taxable in India.
2. The bank will deduct Tax Deducted at Source (TDS), on the NRO interest earnings.
3. She may avail of a lower tax rate, if a Double Taxation Avoidance Agreement (DTAA) exists, between India and Singapore.
4. Interest earned on her NRE Fixed Deposit is also taxable in India, but at a lower rate.
Which of the following statements, accurately reflect the tax rules?
1. Interest earned on her NRO Fixed Deposit, is fully taxable in India.
2. The bank will deduct Tax Deducted at Source (TDS), on the NRO interest earnings.
3. She may avail of a lower tax rate, if a Double Taxation Avoidance Agreement (DTAA) exists, between India and Singapore.
4. Interest earned on her NRE Fixed Deposit is also taxable in India, but at a lower rate.
Rohit requires emergency funds while in India, and approaches his bank for a loan, against his NRO Fixed Deposit. The bank agrees to sanction the loan.
Which of the following conditions, apply to this loan?
1. The loan proceeds can be utilized, for personal purposes in India.
2. The loan proceeds can be credited to his NRE account, for repatriation abroad.
3. Repayment of the loan can be made, using funds from his NRE account.
4. The loan cannot be used for re-lending, or carrying on agricultural/plantation activities.
Which of the following conditions, apply to this loan?
1. The loan proceeds can be utilized, for personal purposes in India.
2. The loan proceeds can be credited to his NRE account, for repatriation abroad.
3. Repayment of the loan can be made, using funds from his NRE account.
4. The loan cannot be used for re-lending, or carrying on agricultural/plantation activities.
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Vimal, an NRI working in Germany, earns his salary in Euros. He is concerned about the fluctuation of the Indian Rupee, and wants to invest his savings in India, without exposing his principal to exchange rate risk. He decides to open a Foreign Currency Non-Resident (Bank) [FCNR(B)] account.
Which of the following statements, regarding this account, are correct?
1. The account is maintained in permitted foreign currencies (e.g., Euro, USD), so there is no conversion to Indian Rupees.
2. The principal amount, and the interest earned, are fully repatriable outside India.
3. The interest earned on this deposit, is exempt from Income Tax in India, as long as Vimal remains an NRI.
4. He can deposit his Indian Rupee savings into this account, to convert them into Euros.
Which of the following statements, regarding this account, are correct?
1. The account is maintained in permitted foreign currencies (e.g., Euro, USD), so there is no conversion to Indian Rupees.
2. The principal amount, and the interest earned, are fully repatriable outside India.
3. The interest earned on this deposit, is exempt from Income Tax in India, as long as Vimal remains an NRI.
4. He can deposit his Indian Rupee savings into this account, to convert them into Euros.
Leena opens an FCNR(B) Fixed Deposit, for a tenure of 3 years. After 2 years, she returns to India permanently, and becomes a resident. She asks her banker, about the status of her deposit.
Which of the following statements, correctly describe the rules applicable to her situation?
1. The minimum permissible tenure, for opening a new FCNR(B) deposit is 1 year, and the maximum is 5 years.
2. Upon becoming a resident, she must immediately close the FCNR(B) deposit, and convert it to Rupees.
3. The deposit is allowed to continue until maturity, at the contracted interest rate.
4. The interest earned on the deposit, becomes taxable in India, after she changes her status to 'Resident'.
Which of the following statements, correctly describe the rules applicable to her situation?
1. The minimum permissible tenure, for opening a new FCNR(B) deposit is 1 year, and the maximum is 5 years.
2. Upon becoming a resident, she must immediately close the FCNR(B) deposit, and convert it to Rupees.
3. The deposit is allowed to continue until maturity, at the contracted interest rate.
4. The interest earned on the deposit, becomes taxable in India, after she changes her status to 'Resident'.
Arjun requires funds for a business venture in India, and decides to avail a loan against his FCNR(B) deposit. He consults the bank, regarding the loan terms.
Which of the following conditions, apply to such loans?
1. The loan can be sanctioned in Indian Rupees, or in foreign currency.
2. The loan proceeds can be freely repatriated abroad, for his overseas business needs.
3. Repayment of the loan can be made, using funds from his NRE account, or local resident resources.
4. The loan proceeds must be used for permissible activities in India, and not for re-lending.
Which of the following conditions, apply to such loans?
1. The loan can be sanctioned in Indian Rupees, or in foreign currency.
2. The loan proceeds can be freely repatriated abroad, for his overseas business needs.
3. Repayment of the loan can be made, using funds from his NRE account, or local resident resources.
4. The loan proceeds must be used for permissible activities in India, and not for re-lending.
Priya, an NRI, wishes to open joint accounts with her mother, who is a resident of India. She explores two options: an NRE account, and an NRO account. She specifically wants to know, about the operating mandates allowed for these joint accounts.
Which of the following statements, correctly describe the regulations?
1. For the NRE account, she can add her resident mother as a joint holder, only on a "Former or Survivor" basis.
2. For the NRO account, she can add her resident mother as a joint holder, on an "Either or Survivor" basis.
3. For both accounts, the resident mother is permitted to be the primary (first) account holder.
4. The NRO account offers more flexibility, regarding joint operation with residents, compared to the NRE account.
Which of the following statements, correctly describe the regulations?
1. For the NRE account, she can add her resident mother as a joint holder, only on a "Former or Survivor" basis.
2. For the NRO account, she can add her resident mother as a joint holder, on an "Either or Survivor" basis.
3. For both accounts, the resident mother is permitted to be the primary (first) account holder.
4. The NRO account offers more flexibility, regarding joint operation with residents, compared to the NRE account.
Rita holds a USD 50,000 FCNR(B) Fixed Deposit, with a tenure of 3 years. One year into the term, she faces a liquidity crunch in India. She approaches the bank, to discuss her options.
Which of the following statements, correctly outline the rules for managing this deposit?
1. She can request a partial withdrawal of USD 5,000 converted to Rupees, but this generally entails breaking the existing deposit, and creating a new one for the balance.
2. If she closes the entire deposit before completing one year, no interest will be paid.
3. She can instruct the bank, to credit the periodic interest earned on this FCNR(B) deposit, directly into her NRE savings account.
4. She can convert the entire FCNR(B) deposit, into an NRO Fixed Deposit, without any penalty.
Which of the following statements, correctly outline the rules for managing this deposit?
1. She can request a partial withdrawal of USD 5,000 converted to Rupees, but this generally entails breaking the existing deposit, and creating a new one for the balance.
2. If she closes the entire deposit before completing one year, no interest will be paid.
3. She can instruct the bank, to credit the periodic interest earned on this FCNR(B) deposit, directly into her NRE savings account.
4. She can convert the entire FCNR(B) deposit, into an NRO Fixed Deposit, without any penalty.
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Sagar holds a diverse portfolio including NRE Fixed Deposits, NRO Fixed Deposits, and an FCNR(B) deposit. He requires a loan of ₹50 lakhs to purchase a flat in Mumbai, and approaches his bank to avail a loan against these deposits.
Which of the following statements, correctly describe the loan regulations across these account types?
1. He can avail a loan in Indian Rupees, against his NRE, NRO, or FCNR(B) deposits.
2. If he takes a loan against his FCNR(B) deposit, he has the option to take it in foreign currency as well.
3. If he takes a loan against his NRO deposit, the loan proceeds must be utilized within India, and cannot be repatriated abroad.
4. Loans against NRE deposits are prohibited, for real estate investment purposes.
Which of the following statements, correctly describe the loan regulations across these account types?
1. He can avail a loan in Indian Rupees, against his NRE, NRO, or FCNR(B) deposits.
2. If he takes a loan against his FCNR(B) deposit, he has the option to take it in foreign currency as well.
3. If he takes a loan against his NRO deposit, the loan proceeds must be utilized within India, and cannot be repatriated abroad.
4. Loans against NRE deposits are prohibited, for real estate investment purposes.
Ajay decides to transfer ₹10 lakhs from his NRE savings account to his NRO savings account, to pay for local renovation expenses. Later, he wishes to move the remaining unspent amount back to his NRE account. He consults his banker, regarding the implications of the initial transfer.
Which of the following statements are correct?
1. The initial transfer from NRE to NRO is permitted, under FEMA regulations.
2. Once the funds are credited to the NRO account, they lose their status as "fully repatriable" NRE funds.
3. The funds can be freely transferred back, from NRO to NRE, without any documentation.
4. Future interest earned on these funds, while they sit in the NRO account, will be subject to Income Tax.
Which of the following statements are correct?
1. The initial transfer from NRE to NRO is permitted, under FEMA regulations.
2. Once the funds are credited to the NRO account, they lose their status as "fully repatriable" NRE funds.
3. The funds can be freely transferred back, from NRO to NRE, without any documentation.
4. Future interest earned on these funds, while they sit in the NRO account, will be subject to Income Tax.
Looking for the most important NRI Banking for your upcoming exams? We have analyzed past papers for Bank Promotion Exams to bring you the 17 most expected questions. Take the live test, review the blueprint, and master the core concepts.
- 🚀 Updated for 2026: Aligned with the latest Bank Promotion Exams syllabus.
- 🧠 Output & Concept Based: Covers basics to advanced scenarios.
- 📊 Live Gamification: Track your score and time dynamically.
- 📥 Free PDF Notes: Available instantly via our Telegram channel.
Test Blueprint & Topic Weightage
| NRI Banking Basics & NRE Accounts | Q1 – Q6 | Easy to Medium |
| NRO Accounts, Tax Rules & Limits | Q7 – Q10 | Medium |
| FCNR(B) & Loan Regulations | Q11 – Q17 | Hard |
⚠️ Examiner Trap Alert: Students frequently assume that because transferring funds from NRE to NRO is easy, the reverse is also true. Examiners trick you here: funds moving from NRO back to NRE face heavy restrictions and require strict tax proofs, as NRO funds are generally non-repatriable!
Practice NRI Banking (Live Mock Test)
⏱️ Estimated Time: 25 Minutes | 🎯 Target Score: 14+ | 📊 Difficulty: Moderate to Hard
High-Yield Core Concepts
NRE Account Repatriation: Governed by FEMA Guidelines, NRE accounts are strictly for foreign earnings, allowing full repatriation and completely tax-free interest in India.
NRO Income Management: Designed for local Indian income (like rent or pension); NRO Taxability rules mean interest is subject to TDS, and Repatriation Rules cap transfers at $1 Million per year.
FCNR(B) Currency Hedging: FCNR(B) deposits (1 to 5 years tenure) are held purely in foreign currency, protecting the principal from exchange rate fluctuations.
Strict Joint Mandates & Loans: You must master FCNR Loan Limits and joint rules; resident relatives can only join an NRE on a “Former or Survivor” basis, unlike NRO’s “Either or Survivor” flexibility.
Semantic Comparison: NRI Banking vs Resident Banking
| Core Definition | Tailored for non-residents managing foreign & local Indian income. | Standard accounts for individuals residing permanently in India. |
| Primary Use Case | Cross-border remittances, managing local assets, forex hedging. | Day-to-day local transactions, salary credit, standard savings. |
| Exam Importance | Very High – Heavy focus on tax exemptions, limits, and joint rules. | Moderate – Usually tested on basic limits and KYC norms. |
Frequently Asked Questions
Why is NRI Banking critical for Bank Promotion Exams?
It is a consistently high-scoring area. Examiners frequently repeat core concepts from this section.
Does this mock test cover the full syllabus?
Yes, these questions target the most highly-weighted concepts found in previous years’ papers.
What are the most repeated topics?
Based on our blueprint, NRI Banking Basics & NRE Accounts and FCNR(B) & Loan Regulations carry the highest weightage.