As NRIs navigate the challenges of living abroad, managing finances efficiently becomes crucial. One such financial tool that caters specifically to the needs of NRIs is the NRE (Non-Resident External) Joint Account. In this blog, we will explore what an NRE Joint Account is, its benefits, eligibility criteria, and how it can help NRIs manage their finances seamlessly.
What is an NRE Joint Account?
An NRE Joint Account is a type of NRI bank account that can be held jointly by two or more people. Given below are some of the features of an NRE joint account:
- It is denominated in Indian Rupees (INR).
- This type of account holds savings income that is earned abroad by an NRI.
- The interest income earned of an NRE joint account is exempt from taxes in India.
- The funds in this account are held in a repatriable form.
Can Two NRIs Open NRE Joint Account?
Yes, NRIs (Non-Resident Indians) can open an NRE account with other NRIs jointly. NRIs can open a joint NRE account with a bank in India, provided they meet the necessary eligibility criteria set by the bank.
This type of account will require approval and signatures from all account holders for any transactions. In case one of the account holders passes away, the account becomes non-operational. The remaining balance will be transferred to the survivor.
Note: The specific requirements may vary slightly among different banks, so it is advisable to contact the bank directly or visit their official website to get the most up-to-date and accurate information on opening a joint NRE account as an NRI.
Can NRIs Open NRE Joint Account with Resident Indians?
Yes, NRI customers are allowed to open and maintain NRE accounts jointly with resident Indians on a “Former or Survivor” basis. The NRI individual is considered the “Former,” and the following relationships with a resident relative are eligible for joint NRE accounts:
- They are members of a Hindu Undivided Family (HUF)
- They are husband and wife
- Persons related in a manner prescribed, which includes:
- Father (including step-father)
- Mother (including step-mother)
- Son (including step-son)
- Son’s wife
- Daughter’s husband
- Brother (including step-brother)
- Sister (including step-sister)
As mentioned earlier, the requirements may vary from bank to bank. Therefore, it is advisable to contact the bank directly or visit their official website to get the most up-to-date information.
Former or Survivor Basis Explained
When two or more individuals open a joint NRE bank account and opt for the “former or survivor” basis. It means that they are designating the account to be operated primarily by one account holder (the “former”) while alive. In this arrangement, the designated “former” account holder has full control and authority over the NRE account, including making transactions, withdrawals, and other banking activities.
However, in the event of the “former” account holder’s death, the surviving account holder(s) automatically become the account owners. The account doesn’t get frozen or inaccessible upon the death of the “former” account holder because the ownership is automatically transferred to the surviving account holder(s).
Suppose you are an NRI living in the USA and you open an NRE joint account with your mother who is an Indian resident. You will be the ‘Former” account holder and your mother will be the “Survivor”. You will be able to operate the account as long as you are alive. Your mother will be able to operate the account only after your death.
Banks that Allow NRE Joint Accounts
Listed below are some of the banks that allow NRIs to open a joint NRE account:
- State Bank of India (SBI): This bank allows you to open a joint account with another NRI as well as with resident Indians on “former or survivor” basis.
- ICICI Bank: This bank also offers NRE joint accounts with NRIs and with resident Indians on “former or survivor” basis.
- Axis Bank: The Axis bank NRE joint accounts can be opened by two or more NRIs or by an NRI with resident relative(s) on ‘former or survivor’ basis. However, during the lifetime of the NRI/PIO account holder, the resident relative can operate the account only as a Power of Attorney holder.
- Federal Bank: This bank allows NRE joint accounts with other NRI/s but it does not allow NRIs to jointly open an NRE account with resident Indians.
How to Open a NRE Joint Account?
The process of opening an NRE joint account may vary among different banks. However, given below are the general steps regardless of the chosen bank:
- Visit the preferred bank’s website.
- Go to the ‘NRI Banking’ section and choose ‘Open NRI account’ option.
- Click on the NRI account opening form.
- Choose the account type as ‘NRE account’.
- Fill in your details like personal details, employment details, overseas-related information, etc.
- You need to provide the necessary information of the joint account holder as well.
- In the form, also fill in the mandate for operation of the account. If you want to open the account jointly with another NRI, then select “Joint”.
- On the other hand, if you want to open the account jointly with a resident Indian, then tick on “Former/Survivor” option.
- Upload the supporting documents as specified by the bank. These documents will include both the account holders’ documents.
- Your NRE joint account will open once application and documents are verified.
NRE Account Rules
- NRIs/PIOs/OCIs are eligible to open NRE accounts in India.
- Individuals or entities from Pakistan and Bangladesh need prior approval from the RBI to open NRE accounts.
- The account must be denominated in Indian Rupees.
- NRE accounts can take the form of savings, current, recurring, or fixed deposit accounts.
- Permissible credits in NRE account include:
- Inward remittances from outside India
- Interest earned on the account
- Interest on investments
- Transfers from other NRE accounts
- Maturity proceeds of investments (if made from this account or through inward remittance)
- Current income like rent, dividends, pension, interest, etc., are allowed as credits to the NRE account as long as they maintain their repatriable character.
- Permissible debits include:
- Local disbursements
- Remittances outside India
- Transfers to other NRE accounts
- Investments in India.
- Free repatriation of funds in the NRE account.
- Accrued interest income and balances in NRE accounts are exempt from Income tax and Wealth tax.
- Operations through Power of Attorney are restricted to permissible local payments or remittances to the account holder through normal banking channels.
Due to lots of information and documentation required to apply for NRE accounts, NRE account opening process is lengthy and cumbersome elsewhere. You can download SBNRI App to apply for an NRE account with nominal documentation in just 10 minutes.You can also click on the button below to apply for an NRE account. Visit our blog and YouTube Channel for more details.