NRIs (Non-Resident Indians) who are looking to invest in India need to have the right bank account to manage their money. As per the RBI guidelines, when an Indian becomes an NRI (Non-Resident Indian), he/she can’t have standard savings accounts in Indian banks. Non-Resident External (NRE) account and Non-Resident Ordinary (NRO) account are two popular types of bank accounts an NRI can operate. Both NRI accounts serve different purposes. Before deciding the right account for NRIs, you should know about the NRI account types, purposes, benefits and opening process of each account type.
Types of NRI Accounts
There are two popular types of NRI accounts an NRI can have:
Non-Resident External (NRE) Account
An NRE account can be opened in India by NRIs to deposit and maintain their foreign earnings. It is a rupee-denominated account and comes in two variants – current and savings account. Features and benefits of an NRE account are as under:
- You can park only foreign earnings in an NRE bank account.
- NRE accounts can be fully repatriable i.e. you can transfer funds (principal and interest) from an NRE account to your account in the country of residence.
- Both principal and interest earned in NRE savings accounts are not taxable in India.
- You can open an NRE account jointly with eligible NRIs/ PIOs. Indian residents may not be eligible to have a joint NRE account.
- Exchange rate risk is usually higher in NRE bank accounts as the funds are transferred to Indian currency.
Non-Resident Ordinary (NRO) Account
An NRO account is also a rupee-denominated bank account used by NRIs to park their earnings in India, such as rent, dividends, pension, etc. There are two types of NRO accounts – current and savings account. Features and benefits of an NRO account are as under:
- You can park both foreign and Indian earnings in an NRE bank account.
- You can transfer the interest earned without restriction from NRO accounts, but the principal amount has limited repatriability. NRIs can transfer funds only after paying applicable taxes. The repatriation is limited to 1 million USD in a financial year.
- Income accumulated in the NRO account is taxed at 30% plus 3% cess. The interest earned above Rs. 10,000 in a financial year is subject to taxation.
- NRO accounts can be held jointly even if one of the account holders is an Indian resident.
- There is no exchange rate risk in NRO bank accounts as long as the deposit is made in INR.
Also Read: NRI Account Opening Online: 5 Simple Steps
Which NRI account is the best, NRE or NRO?
As described before, you can open NRE accounts to keep your foreign income in an Indian rupees, and NRO accounts are for parking your domestic earnings in India. So, you can choose the right NRI account for you depending on the source of your earnings. However, opening both NRI accounts may be a good idea as they can help you achieve all purposes.
Right bank to open your NRI account
Apart from choosing the right NRI account, it is important to find the right bank to open your NRI account. Several banks with an excellent national and international presence allow you to open NRI account online with a few clicks. Here are the top 5 banks for NRI account opening.
State Bank of India
State Bank of India is the largest public sector Indian bank with a widespread network in several countries in the world. SBI offers an array of NRI banking services to Indians living abroad. NRIs can apply for SBI NRI account opening online on the bank’s website. SBI NRI accounts include SBI NRE accounts, NRO accounts, NRE salary accounts, NRO salary accounts, etc.
ICICI bank is very popular among non-resident Indians because of its accessible digital banking services. The bank uses the latest technologies to help customers apply for NRI account opening online. You can apply for various types of ICICI NRI accounts such as NRE/ NRO savings accounts, NRI premium accounts, FD accounts.
Also Read: ICICI Bank NRI Account Opening
HDFC Bank is a leading private sector Indian Bank with a large network across the country and abroad. Indians living in foreign countries can easily open HDFC NRI accounts online as well as offline. NRI accounts offered by the bank are HDFC NRE account, NRO account, salary account, etc.
Axis Bank provides one of the best NRI banking services for Indian citizens living abroad. Axis NRI accounts are NRE accounts, NRO accounts, mariner accounts, prime savings accounts and easy savings accounts.
Also Read: Axis Bank NRI Account Opening
Kotak Mahindra Bank
Kotak Mahindra Bank is a tech-savvy next-gen banking and financial company catering to domestic and NRI customers. You can open Kotak NRI accounts such as NRE accounts and NRO accounts.
Other than the described banks, you can apply for a Federal Bank NRI account, RBL NRI account, Citibank NRI account etc.
Due to lots of information and documentation required to apply for NRI accounts, NRI account opening process is lengthy and cumbersome elsewhere. You can download SBNRI App to apply for an NRI account with nominal documentation in just 10 minutes.
It depends on your requirements. You can compare the features of NRI accounts offered by multiple banks to find the best one. For example if you want to open an account with a top bank you can compare the features of SBI NRI account, HDFC NRI account and ICICI NRI account. However, in terms of interest rate and minimum balance, SBM, Kotak Mahindra NRI accounts can be a smart choice.
Yes, you can open multiple NRE and NRO accounts, but with different banks in India.
Both accounts serve different purposes. For example, NRIs can open an NRE account to park their foreign income and NRO accounts for keeping their Indian earnings.
The minimum balance requirement for SBI NRI account is Rs. 1 lakh for Metro & Urban areas and Rs. 50,000 for Semi-Urban and rural areas.
The minimum monthly balance requirement for an ICICI NRI account is Rs. 10,000.