The Foreign Exchange Management Act (FEMA) regulations significantly impact Non-Resident Indians (NRIs) and their bank accounts in India. According to FEMA regulations NRI, NRIs must convert their resident savings accounts to NRI-specific accounts, such as Non-Resident External (NRE), Non-Resident Ordinary (NRO) or Foreign Currency Non-Resident (FCNR) accounts.

NRE accounts enable NRIs to deposit their overseas earnings in Indian rupees, with both the initial deposit and the interest earned being completely transferable back to their country of residence without any limitations.

NRO accounts are used to manage income earned in India, such as rent, dividends or pension. While the principal amount in NRO accounts is repatriable, repatriation of the interest earned is subject to specific limits and documentation requirements. The interest earned on NRO accounts is subject to Indian income tax​.

FCNR accounts allow NRIs to maintain deposits in foreign currencies, protecting them from exchange rate fluctuations. Both the principal and interest in these accounts are fully repatriable and are not subject to Indian income tax​.

Additionally, FEMA regulations set guidelines for the repatriation of funds. NRIs can repatriate up to USD 1 million per financial year from their NRO accounts, provided they comply with certain conditions and submit necessary documentation. This facilitates the transfer of money for legitimate purposes while ensuring compliance with Indian foreign exchange laws​.