A large number of Indians move abroad for jobs and become NRI over a period of time. As per the Foreign Exchange Management Act (FEMA), an NRI can’t operate a regular bank account in India. They need to open an NRE account to transfer and maintain their foreign earnings in India. Let’s understand everything about NRE savings accounts, such as opening process, interest rates and rules.
What is NRE account?
The full form of NRE is Non-Resident External Account. It is an NRI bank account for NRIs to transfer their foreign currency funds to India. The fund is converted into Indian Rupee or INR at the time of deposit. Thus you can deposit funds in any currency, say USD, and withdraw it in Indian denomination.
There are various types of NRE accounts – savings account, current account, recurring or fixed deposit account. Based on your requirement you can choose from these accounts.
Benefits of NRE Account
Following are key benefits of NRE accounts for non-residents individuals:
- Rupee denominated account: By opening an Non-Resident External bank account, you can keep all your foreign currency savings in Indian denomination.
- Repatriability: Money in NRE accounts is fully and freely repatriable from India to abroad without currency conversion hassle. You can repatriate the principal and interest amount to a foreign account from this bank account without any restrictions.
- Tax-free: NRE accounts are exempt from tax. This means both the principal and interest earned thereon are free from tax in India.
- Multiple transactions: You can withdraw funds from NRE accounts for multiple types of transactions including personal, business- related or investment-related needs. You can open an NRE bank account to make direct investment in India.
- International debit card: Non-resident Indians can use an international debit card to easily withdraw money from the NRE bank accounts at any time.
- Joint holder: The account can be held jointly with another NRI.
NRE Bank Account Rules
Following are important NRE account rules that you should know about:
- As per the Foreign Exchange Management Act (FEMA), an NRI can’t operate a regular savings account in India to conduct financial transactions. As an NRI, you need this account to convert foreign earnings and save them in INR. You need to open an NRE account to invest in India through your foreign income.
- NRE accounts only hold foreign earnings and not your earnings from India. You will need to open an NRO account to hold payments from India. Money that you deposit in this account is saved in Indian Rupees.
- NRE accounts can be held jointly with another NRI. You can also hold the account jointly with a resident who is a close relative, and the operation in this case shall be on ‘Former or Survivor’ basis only.
- The authorized family member in India can access the balance available in your account.
- You must remember that funds NRE bank accounts are subject to exchange risk fluctuations.
NRE savings account opening process
While the NRE account opening process slightly varies from bank to bank, you can open an NRE account online or visit a bank branch. You need to meet the following requirements to open NRE accounts:
Eligibility
- An NRI (Non-Resident Indian), an OCI (Overseas Citizen of India), or a PIO (Personal of Indian Origin) can open NRE accounts.
- You need to deposit funds in the account in a foreing currency.
- Your power of attorney, if applicable, must be an Indian resident.
Documents required
Before initiating an NRE account opening process, you should keep the following documents handy for smooth and hassle-free application:
- NRE bank account opening application form
- Photographs
- Photocopy of your Indian Passport
- For OCI & PIO:
- OCI or PIO card
- Overseas address proof
- Photocopy of your valid visa or residence permit
- Other miscellaneous documents as required by the bank
Best NRE Account in India
Listed below are the best NRE accounts in India.
- Axis Bank
- ICICI Bank
- State Bank of India
- HDFC Bank
- Kotak Mahindra Bank
- Bank of Baroda
- Yes Bank
- RBL Bank
- Federal Bank
- SBM
NRE Savings Account Interest Rates 2023
Listed below are NRE savings account interest rates offered by top 10 banks in India:
| Bank Name | NR Account Interest Rate (%) p.a. |
|---|---|
| Axis Bank | – 3% (below 50 Lakhs) – 3.50% (above 50 Lakhs to Rs. 800 cr.) |
| Kotak Mahindra Bank | 3.50% |
| ICICI Bank | – 3% (below 50 Lakhs) – 3.50% (above 50 Lakhs) |
| HDFC Bank | – 3.50% (of and above Rs. 50 .) – 3% (below 50 Lakhs) |
| SBI Bank | – 2.70% for balance < Rs. 10 cr – 3.00% p.a. for balance Rs. 10 cr and above |
| Bank of Baroda | 2.75% |
| Yes Bank | – 4% (up to 1 lakh) – 4.25% (Rs. 1 lakh to 5 lakh) – 5% (Rs. 5 lakh to 10 lakh) – 6% (Rs. 10 lakh to Rs. 1Cr) – 6.25% (Rs. 1 cr to 10 cr) – 6.00% (Rs. 10cr to Rs. 25 Cr) |
| RBL Bank | 4.25% to 6.50% |
| Federal Bank | 3.05% – 6.00% p.a. |
| SBM | – 3.50% (up to 2 Lakhs) – 4% (2 lakhs to 5 lakhs) -5% (above 5 Lakhs) |
Difference between NRE and NRO account
While both NRE and NRO accounts are meant for Non-Resident Indians, there are certain differences between NRE and NRO accounts:
| Features | NRE Account | NRO Account |
|---|---|---|
| Purpose | For income earned by NRI outside India | For income earned in India by NRI (Rent, dividends etc.) |
| Types | Current, Savings and Deposit | Current, Savings and Deposit |
| Currency deposited | Foreign currency | Indian Rupee |
| Tenure of Deposits | 1 year to 10 years | 7 days to 10 years |
| Interest | Up to 7.50%* | Up to 7.30%* |
| Joint Account Holding | NRIs (Close resident relative) | Both NRIs and Residents |
| Repatriability | Both Principal and Interest are completely repatriable | Up to a maximum of 1 million USD per financial year |
| Tax Deductions | Tax free | Tax on Interest earned (not on principal amount): 30% tax + surcharge + education cess on interest earned |
Tax Implications
As mentioned above, NRE accounts are tax free. To promote foreign currency inflow and increase the reserve of India, the Indian Government has exempted taxes on funds in NRE bank accounts as well as on the interest from such accounts. Hence, neither the balance, nor the interest earned thereon is taxable in India.
What is NRE PIS Account
The NRE PIS account is an NRE savings bank account with PIS permission granted by the Reserve Bank of India. This account enables NRIs to trade in the Indian stock market on a repatriation basis.
Final words
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 minimal documentation in just 10 minutes.
SBNRI is a one-stop destination for NRI Bank Account Opening. You can also click on the button below to apply for NRI account opening and more information.
FAQs
Both NRE and NRO accounts have their own set of benefits. If you want to maintain your overseas earnings in India in INR, you can open an NRE savings account. Whereas an NRO account can be opened to save and mange the funds earned in India by NRIs.
There are two types of NRI savings and current accounts that NRIs need to open in a bank in India to save and maintain their overseas and India earnings – NRE and NRO accounts.
NRIs can open NRE, NRO and FCNR fixed deposit accounts in India.
Yes, account holders can withdraw cash in Indian Rupees (INR) from their NRE account in India.
