The number of Indians working in foreign countries has shot up tremendously in the last few years. This phenomenon has resulted in Indian banks offering services that cater to such individuals who are earning in higher foreign currencies with the aim to save money and invest in Indian banks. These accounts facilitate fund transfer, investments, savings and earnings of the Non Resident Indian communities across the world. There are three types of NRI accounts which are authorized by financial institutions and banks in which you can maintain Indian and foreign currency earnings.
Non – Resident Ordinary (NRO) Savings Account: NRO accounts are ideal for NRIs who have a constant flow of income in INR, e.g. income earned through renting property, pension income, dividends etc., while they are residing abroad. NRO accounts are perfect for making local payments and other needs in India.
Features:
• Source of funds deposited in NRO account must be from within India, not abroad
• You must adhere to RBI laws before transferring money outside India
• NRO account is maintained only in INR
• The account can be opened jointly with an NRI or Resident Indian
• You can transfer funds to NRO or Resident accounts, but not NRE accounts
• You can submit a letter of authorization if you want a local representative to operate your account
• You must pay 30.9% tax on interest earned on NRO account
Non – Resident External (NRE) Savings Account: The most popular type of NRI bank account, an NRE facilitates an easy transfer of foreign currency to Indian accounts. All foreign exchange deposits which are received for credit in NRE accounts are converted to INR at the banks’ buying rates.
Features:
• You can only deposit foreign currency in this account
• While the money is deposited in foreign currency, the account is maintained in INR
• Since these accounts don't qualify for wealth tax, any interest earned on them is subject to tax exemption
• You can easily transfer money from your NRE account to another NRE account, NRO account or Resident account
• You can open this account jointly with another NRI, but are prohibited from opening it with an Indian Resident
Foreign Currency Non-Resident (FCNR) Fixed Deposit Account: With the FCNR account you can maintain your foreign currency in the same denomination, which helps curtail any losses incurred from currency fluctuations.
Features:
• FCNR accounts are operated in foreign currencies and you can deposit any foreign currency in it, except INR
• Interest earned on FCNR accounts is paid in the same foreign currency as it is being maintained in
• You are not charged any income tax on earnings through these NRI accounts
• You can open FCNR account jointly with another NRI, but are prohibited from opening it with an Indian Resident
• Deposits made in these accounts can last from 1 - 5 years maximum
• You can avail overdraft in your current or savings account against your FCNR FD
• You can maintain your FCNR account in currencies like USD, EUR, GBP, CAD, AUD and JPY
Non – Resident Ordinary (NRO) Savings Account: NRO accounts are ideal for NRIs who have a constant flow of income in INR, e.g. income earned through renting property, pension income, dividends etc., while they are residing abroad. NRO accounts are perfect for making local payments and other needs in India.
Features:
• Source of funds deposited in NRO account must be from within India, not abroad
• You must adhere to RBI laws before transferring money outside India
• NRO account is maintained only in INR
• The account can be opened jointly with an NRI or Resident Indian
• You can transfer funds to NRO or Resident accounts, but not NRE accounts
• You can submit a letter of authorization if you want a local representative to operate your account
• You must pay 30.9% tax on interest earned on NRO account
Non – Resident External (NRE) Savings Account: The most popular type of NRI bank account, an NRE facilitates an easy transfer of foreign currency to Indian accounts. All foreign exchange deposits which are received for credit in NRE accounts are converted to INR at the banks’ buying rates.
Features:
• You can only deposit foreign currency in this account
• While the money is deposited in foreign currency, the account is maintained in INR
• Since these accounts don't qualify for wealth tax, any interest earned on them is subject to tax exemption
• You can easily transfer money from your NRE account to another NRE account, NRO account or Resident account
• You can open this account jointly with another NRI, but are prohibited from opening it with an Indian Resident
Foreign Currency Non-Resident (FCNR) Fixed Deposit Account: With the FCNR account you can maintain your foreign currency in the same denomination, which helps curtail any losses incurred from currency fluctuations.
Features:
• FCNR accounts are operated in foreign currencies and you can deposit any foreign currency in it, except INR
• Interest earned on FCNR accounts is paid in the same foreign currency as it is being maintained in
• You are not charged any income tax on earnings through these NRI accounts
• You can open FCNR account jointly with another NRI, but are prohibited from opening it with an Indian Resident
• Deposits made in these accounts can last from 1 - 5 years maximum
• You can avail overdraft in your current or savings account against your FCNR FD
• You can maintain your FCNR account in currencies like USD, EUR, GBP, CAD, AUD and JPY
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