When an NRI comes back to India and becomes a Resident Indian, he is required to inform his bank about the change of status. The NRE and NRO accounts that he holds will have to be redesignated to resident savings account.
One also has the option to convert an existing NRE account to a Resident Foreign Currency (RFC) account, where one can maintain funds in foreign currency and the funds (principal + interest) are fully repatriable. The RFC account allows credits from overseas in foreign currency from sale of assets outside India or income received outside India (in the form of employment, assets, investments) as the case may be.
A declaration for redesignation of NRE/ NRO account to Resident Rupee Savings account or the RFC account is required to be filled up by the returning NRI. Details such as account number, joint holder details (if any), and customer ID should be filled up and signed by all account holders. The form may be submitted at the local branch of the bank.
Once the declaration is received by the bank, the NRE/ NRO/ FCNR accounts are redesignated to Resident Rupee Savings account or to Resident Foreign Currency account as the case may be. Once the NRE account is converted to Resident Savings account, the interest earned thereon becomes taxable.