Local payment obligations can be discharged through NRO A/c
The NRO account which can be maintained either as savings or current account can be opened for a maximum of 6 months. All foreign remittances via banking channel plus proceeds from the foreign exchange sale can be maintained in the NRO account. Also, the NRO bank account allows foreign nationals to make any local payments. However, all payment obligations towards resident citizens in India in excess of Rs. 50,000 can be discharged only via cheque, demand draft or pay order.
Balance amount in NRO A/c is allowed to be repatriated
If the NRO account has been maintained for not more than six months, banks can convert the balance amount into the foreign currency for paying to the account holder at the time he leaves India. Also, another condition for the banks to make the conversion and eventually the payment to the foreign citizen is that no local funds should be credited to the account other than the interest accrued.
In the other scenario, when the NRO bank account is maintained for over six months, foreign citizen is required to make an application requesting for the repatriation of the balance amount in the NRO account to the Foreign Exchange Department of RBI via the dealer bank with which the NRO account is maintained.
Information sourced from RBI website