The Most Common Bank Account Options for NRIs

Having a bank account is a basic requirement for all, especially for the NRIs who move abroad in search of a better job or business opportunities. Read on to know the type of accounts NRIs can open in India.

If you recently moved to a foreign country for a job or business or any other purpose and wish you to stay there for a considerable period, you may need to open an NRI bank account to remit money back to India. Today, almost all the major Indian banks offer NRI bank accounts with various features and benefits. With banks offering online services, the process of opening and operating an account is simple; you must comply with the KYC norms and provide proof of your NRI status.

The important thing about opening an NRI bank account is choosing the right type of account to suit your specific needs. Typically, NRIs have three options – NRO Account, NRE account, and FCNR account. Let’s know more about each of these types of bank accounts.

NRO (Non-resident Ordinary) Account

NRO account is an ideal account for you to manage your income earned in India. You can open an NRO account in the form of a savings account, current account, recurring deposits, or fixed deposits.

Features of NRO account

  • You can use the NRO account to deposit your earnings in India, such as property rent, dividends from stock, and ensure the safety of your income.
  • Suppose you have opened an NRO fixed deposit account. In that case, you can avail of a loan against the deposit to meet any emergency expenses that may arise either in India or your country of residence. Since it is a secured loan, the rate of interest is much lower than an unsecured loan.
  • You can open a joint NRO account with either an Indian resident or another NRI. Additionally, suppose both the co-applicants live abroad. In that case, they can appoint an individual in India and authorise them to operate the account by drawing power of attorney in their favour.
  • The deposits in the NRO account can only be made in INR.

FCNR (Foreign Currency Non-Resident) Account

As the name suggests, if you open an FCNR account, you can maintain the deposits in foreign currency. Most banks in India allow deposits in only specific currencies, including Australian Dollars, Japanese Yen, American Dollars, Canadian Dollars, British Pounds Sterling, and Euro.

Features of FCNR account:

  • Since the deposits are held in the foreign currency, there is no risk of exchange rate fluctuations, which means you get higher returns.
  • It is an excellent avenue to keep your hard-earned money safe and get risk-free returns.
  • You can open an FCNR account only as a term-deposit account with tenure ranging from one to five years.
  • The interest earned on the FCNR account is exempted from tax.
  • The Reserve Bank of India regulates the interest rate for FCNR account deposits, and it is the same in all banks across the country.

NRE (Non-resident External Account)

NRE account is an ideal account for you if you live and earn in a foreign country and want to remit money to your family member in India. This account allows you to convert the earnings in foreign currency to Indian Rupees at the time of deposit so that your family in India can withdraw the same in INR.

Features of NRE Account

  • Based on your specific requirements, you can open an NRE account as a savings account, current account, or term-deposit account (fixed deposit and recurring deposit).
  • You can open a joint NRE account with another NRI
  • You can repatriate the principal and the accrued interest in your account to an FCNR account without incurring any charges.
  • You can use the NRE account for both personal and business purposes in India and abroad.