"" Now the question is when an PIO/OCI can open or have an ordinary saving account. what is the use of these accounts with a prefix of NR??? ""

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PIO is an Individual or a Person of Indian Origin.

An OCI is an Overseas Citizen of India.

These two categories of individuals no longer HOLD an Indian Passport. SO, they apply and pay to get cards of either one of these type or both, to get entry into India and stay there as long as they want or the cards will permit. That is as close to being an Indian and being able to stay there. Previous to this they had to get a visa and stay there as long as the Visa would allow. They had other inconveniences associated with them.

Now you know who is an NRI an OCI and also a PIO. All these categories of individuals are, all NON Residents.

Now to the accounts: When a normal Indian Opens an accoount, he opens an account, which is a RUPEE Account. Which is equal to a NRO account. But an Indian does not get the NR portion added to that Rupee account. But an Overseas Indian when he opens account, HE can ONLY OPEN a Foreign Currency Account. That is called an FCNR account. Which Indicates that is by the way of a remittance of foreign Currency into this account and it is a NON Resident Account.
This deposit is also in RUPEE denomination, which means they immediately convert it into the local counterpart at the then prevailing market rate. For instance one Canadian Dollar which is equal to Rupees 44.00 today will get him Rupees 43/= per CD. they will take their commission of one Rupee or less, as the case may be.

With this FCNR account he can swing a few dollars for his daily usage into a local Indian Account, by exchanging the currency of deposit into the local currency which is now called an Ordinary Rupee Account with a NR added as a PREFIX. which becomes NRO account. I think I have made it amply clear now.

Now why does an NRI need a FCNR Rupee Account and also an NRO account? That is because, you might get a few rupees from your friends or from an Insurance policy or from the sale of a few goods or a property etc., which will fetch a few Rupees and he can deposit it into this NRO account and spend it or write Cheques on that account to give to others and use it for his/her day to day requirements there and maintain a record of the same.

So, he OPENS an NRO account and makes use of the Indian Rupees that he gets by the way of sale or his earnings there and keeps track of it.

This deposit if he so wishes can convert it to Foreign Currency with the Bank Manager's Authorization and a RESERVE BANK PERMIT, to any Currency that he wants and send it outside of India to his family and friends any where else they reside. They have made it simple and currently a phone call does it all.

This way they have separated their 'P's and 'Q's and made it simple for themselves there in India.

If you have any more questions or doubts in this matter please do ask and I will provide you with more clarifications and explanations.

Freddie.