Features of the NRI Accounts you need to be aware of

NRIs or Non-Residential Indians are allowed to open and hold savings accounts in India. However, these accounts are not the same as the ones that are offered to residential Indians. There are three types of NRI accounts that one can take advantage of if he/she wants to maintain a bank account in the native country.

Here is a look at the three types of accounts and the features pertaining to the same.

1. FCNR Account

FCNR account stands for Foreign Currency Non Resident account. This particular kind of account is only useful for keeping fixed deposits for a certain period of time, ranging from one to three years. The features of such an account include-

• Depositing FD amounts for at least one year and up to a maximum of three years.
• The principal and interest earned can be transferred to an account overseas in the same currency or it can also be converted to any other currency as well.
• The interest on the FD is exempt from any income tax in India.

2. NRE Account

NRE or Non-Resident External Rupee account allows an NRI to open a simple savings account. However, the balance is maintained in the Indian currency only. Even if a deposit is made in another currency, it would first be converted to INR, before getting deposited. The features of the account include,

• Withdrawals can be made in the foreign currency, but is such a case, the account holder needs to first convert the INR into the currency of their choice. The cost for the same must be borne by the account holder.
• The deposits made in such an account as well as the interest earned is free from any income tax under the laws of the Indian government.
• The entire amount in the account can be sent out of India without requiring any clearance from the Reserve Bank of India.
• Account holders can also apply for loans against the deposits in the NRE account.

3. NRO Account

Any normal bank account held by a Non-Residential Indian is known as Ordinary Non-Resident Account or NRO account. The features of an NRO account include,

• Making deposits into the account from overseas.

• This account is non-repatriable. This means that account holders cannot transfer their savings from this account into a foreign account without the permission of the RBI.

• The interest earned from these accounts are not exempted from Income tax in India.

If you are an NRI looking to open an NRI account in the country, ensure that you understand the features of these three accounts and choose the one that best suits your needs.