General information, not legal or tax advice. FEMA rules, tax treatment and bank practice change; check with your bank or a qualified adviser for your situation.
If you are an NRI with an Indian bank account, you can write cheques on both NRE and NRO accounts. Both are rupee accounts, and both cheques clear through the same CTS system as any resident's cheque. The difference is the money behind the cheque: what can be paid in, and whether it can go back abroad. A cheque on your NRE account spends money that is fully repatriable. A cheque on your NRO account spends money that can be sent abroad only within limits.
The facts below come from the Reserve Bank of India's FAQs on accounts in India by non-residents (updated January 2025). Your bank's rules may be narrower.
NRE vs NRO in one table
| NRE account | NRO account | |
|---|---|---|
| Purpose | Keeping money earned abroad, in rupees | Handling income and money that arise in India |
| Main credits | Inward remittances from abroad, transfers from other NRE/FCNR(B) accounts, interest | Inward remittances, legitimate dues in India (rent, pension, dividends, sale proceeds), transfers from other NRO accounts |
| Local rupee funds paid in | Generally not permitted | Permitted |
| Cheques for local payments | Yes | Yes |
| Repatriation abroad | Fully repatriable | Up to USD 1 million per financial year from balances and asset sale proceeds, subject to tax |
| Tax on interest in India | Exempt (per RBI FAQ) | Taxable |
| Joint with a resident | Only with a resident relative, on "former or survivor" basis | Allowed on "former or survivor" basis |
What each account's cheques can pay
NRE cheques
The RBI lists local disbursements and investments in India among the permitted debits from an NRE account. So you can write an NRE cheque to a builder, a school, a relative, a tax authority or a utility, as you would from any account. The money leaves your repatriable pool when you do, so think about which account to use. If a payment is purely local, paying it from NRO keeps your repatriable NRE balance intact.
NRO cheques
NRO is the account for your Indian life: rent you receive, pension, dividends, maturity proceeds, a property sale. All local rupee payments are permitted debits, including investments, subject to the relevant regulations. Most NRIs who pay bills, EMIs or maintenance in India do it from NRO.
Receiving cheques: where do they go?
This is where NRIs most often go wrong. Local rupee funds generally can't be credited to an NRE account. If a tenant, a buyer or a relative in India gives you a cheque, it normally belongs in your NRO account. The RBI does allow "current income" such as rent, dividend, pension and interest into NRE, but only where the bank is satisfied it is genuinely your current income and tax has been dealt with. Banks apply this conservatively, and many simply route such cheques to NRO.
If you deposit a resident's cheque into NRE, expect the bank to return it, credit it to NRO instead, or ask questions. Get the account right on the deposit slip before you hand it in.
Writing and signing cheques from abroad
Most NRIs hit one practical problem: you're in Dubai or London, and the payee is in Pune.
- Sign before you send. A cheque must carry your signature exactly as it is in the bank's records. If your signature has drifted over years abroad, update your specimen first. A mismatch is a common reason for return (see why cheques bounce).
- Fill every field before it leaves your hands. Write the payee, amount in words and figures, and date, and cross it "A/c Payee". A signed blank cheque in an envelope is an invitation to fraud.
- Post-dated cheques for rent, EMIs or school fees are common. Keep a list of what you've issued and when each falls due, and keep the account funded. Under same-day clearing, there is no buffer.
- Use Positive Pay for larger cheques. You submit the details through net banking or the app wherever you are, and the bank checks them when the cheque is presented. See positive pay.
- Check that your cheques are payable at par. Almost all CTS cheques now are; see multicity cheques. This matters if your account is in Kochi and your payee banks in Delhi.
Power of attorney and joint holders
Many NRIs let someone in India operate the account. The RBI restricts what that person can do.
- Power of attorney (PoA) holder. On an NRE account, a PoA holder may make withdrawals only for permissible local payments, or remit money to the account holder through normal banking channels. They can't repatriate funds to anyone else, and they can't make gifts from the account. NRO has similar limits: local payments, and remittance of current income to the account holder abroad.
- Joint holder who is a resident. An NRE account can be held jointly with a resident relative only on a "former or survivor" basis. The resident relative can operate it only as a PoA holder during your lifetime.
- Cheques signed by the PoA holder. Banks usually register the PoA and the holder's signature. Cheques signed under it must stay within the purposes above. Ask your bank how it wants them signed (for example, with "for and on behalf of" wording). See who can sign a cheque.
Common issues
- Old resident account still in use. When you become non-resident, the RBI says your existing resident account "should be designated as NRO account". Writing cheques on an undesignated resident account after you've moved abroad is a compliance problem. Tell your bank when your status changes.
- Bounced NRI cheques. Section 138 of the Negotiable Instruments Act applies to a dishonoured NRI cheque just as it does to a resident's. Living abroad doesn't stop a notice or a complaint. See cheque bounce law in India.
- Cheque books running out. Order a new book well before you need it, and have it delivered to an Indian address you trust or collected by your PoA holder. Many banks deliver cheque books only to an Indian address, so check your bank's policy.
- Tax on NRO interest. NRO interest is taxable in India, and tax is usually deducted at source. Treaty relief and residency rules are questions for a tax adviser.
- Repatriating NRO money. Sending NRO balances abroad needs tax compliance paperwork and is capped at USD 1 million per financial year. Don't count on a cheque-funded NRO balance being available abroad quickly.
Keeping track from overseas
If you write a run of post-dated cheques before flying back, record them somewhere you'll actually check: cheque number, payee, amount, date and account. ChequeMaster is a Windows desktop app. It prints onto your bank's own cheque leaves, records each cheque against its number, and lets you filter forward-dated cheques still marked Issued. It works offline once activated, and the data stays on your PC, so back it up. See managing post-dated cheques.
