NRI Bank Accounts

Non-Resident Indians (NRIs) are different from Resident Indians when it comes to holding bank accounts in India. An NRI can’t hold a resident savings account after he/she becomes an NRI. It becomes necessary to either convert their resident bank accounts to NRI accounts or open new NRI Bank Accounts.

 

Let’s explore the different types of NRI Bank Accounts:

 

  • Non-Resident External (NRE) Account: The NRE account can be opened for the purpose of maintaining the income earned outside India with tax free interest (upto 7.95%*) on Fixed Deposits. Both the principal amount and interest earned are completely repatriable from India. 
  • Non-Resident Ordinary (NRO) Account: The NRO account can be opened for the purpose of maintaining the income earned from India such as income from rent, pension, etc. The repatriation of the money in the account can be done up to a maximum of 1 million USD per financial year. Note: 30% tax + surcharge + education cess will be deducted at the source of interest earned in India
  • Foreign Currency Non-Resident (Bank) [FCNR(B)] Account: The FCNR account is a term deposit account in USD, GBP, EUR, JPY, AUD, CAD, SGD, HKD, and others. The ‘term’ in a term deposit account is a fixed tenure of up to 12 months, 24 months, 36 months, 48 months or 60 months that can be opted by the NRIs at the time of account opening. The interest income is not taxable in India and both the principal amount as well as the interest are completely repatriable.

 

These accounts have different benefits based on the needs and requirements of the NRI. Let’s explore more and compare these accounts:

 

NRI Bank Accounts: Comparison

Factors to consider

Non Resident External (NRE) Account Non Resident Ordinary (NRO) Account

Foreign Currency Non Resident (FCNR) Account

Purpose

For income earned outside India For income earned from India (pension, rent etc.) 

Foreign Currency Investment in India

Currency

INR INR USD, GBP, EUR, JPY, CAD, AUD, SGD, HKD and CHF

Joint Account Holding

Only NRI Both NRI and Residents

Only NRI

Tenure of Deposits

1 year to 10 years 7 days to 10 years 1 year to 5 years

Interest

Up to 7.81%* Up to 7.30%*

Up to 3.05%*

Repatriation

(transfer of money from Indian bank account to foreign bank account) 

Both Principal (money invested initially) and Interest completely repatriable Up to a maximum of 1 million USD per financial year

Both Principal and Interest completely repatriable

Tax Deductions

No tax Tax on Interest earned (not on principal amount): 30% tax + surcharge + education cess will be deducted at the source of interest earned in India

No tax

There are certain benefits associated with the Non-Resident External (NRE) and the Non-Resident Ordinary (NRO) Bank Accounts. Let’s glance through them:

Benefits of NRI Bank Accounts

Non Resident External (NRE)

Non Resident Ordinary (NRO)

– Park money earned abroad and earn tax-free interest up to 6.80%*

– 24*7 withdrawals using International Debit Cards

Invest in opportunities such as Mutual Funds, IPOs etc.

– Link NRE Account to a PIS Account and trade in Indian stocks

– Convenient Banking Experience

– Repatriate funds abroad fully and freely

– Maintain the income generated in India from sources such as pension, rental income etc without any hassle

– Earn interest on the funds in the account up to 7.30%*

– Invest in opportunities such as Mutual Funds, IPOs etc.

– Link NRO Account to a PIS Account and trade in Indian stocks

– Convenient Banking Experience

NRI Bank Accounts provide NRIs with a convenient way to park their funds in India, get tax-free interest on them and use this money to invest in the Indian Markets to gain maximum benefits.

 

Below are some common questions NRIs look the answer for:

 

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