NRI bank accounts cater to the unique banking needs of Non-Residential Indians (NRIs) or a Person of Indian Origin (PIO). These individuals reside in foreign nations, and their financial transactions, including income and savings, are carried out in foreign denominations like Dollars and Euros. NRI accounts can help manage one’s finances both at home country and abroad. Many leading banks and financial institutions provide NRI accounts in India, including the facility for money transferability and conversion, among others.
There are different types of NRI accounts with different attributes. NRI accounts in India can be further classified into three types:
- Non-Resident External Account (NRE)
This account is held in the country of residence, but the funds are maintained in INR. The funds are generated in the country of residence.
- Non-Resident Ordinary Account (NRO)
This account is for the income generated in India. The funds are also maintained in INR.
- Foreign Currency Non-Resident Account (FCNR)
It is a fixed deposit account for NRIs and PIOs, primarily for income earned overseas, which allows them to deposit money in any currency approved by RBI.
Here are seven essential things you must know about NRI accounts:
The most significant benefit of having an NRI account is overall accessibility, allowing you to access your funds from anywhere, anytime with digital banking platforms. One can also open NRI accounts in India online as the documentation process is quite convenient and can be managed from any country in the world. A resident Indian can also operate these accounts through a power of attorney (mandate holder) mode.
- Repatriation Benefit
NRI accounts allow smooth movement of funds from overseas to India and vice-versa. Apart from being highly convenient, NRI accounts also offer repatriation, with NRE accounts being fully repatriable and NRO accounts allow repatriation up to USD 1 million on submission of relevant documents.
- Tax Benefits
Choosing the right NRI account in India for your needs will also help you save a lot on taxes. The interest earned on NRE accounts is already tax-free in India, while savings in NRO Savings and Fixed Deposits are subject to TDS. Transferring funds from the NRE account to the NRO account is also allowed post-tax deductions.
- Minimum Balance
Contrary to popular belief, you don’t have to maintain a high balance in your NRO and NRE accounts to keep them active. Most financial institutions and banks have considerably lowered their minimum monthly balance, and in most cases, it is up to INR 50,000.
- FCNR Deposits
Apart from NRE/NRO fixed deposits and savings accounts, there is also an option to deposit foreign currency with FCNR accounts. It also allows you to collect interest on foreign currency. Interest earned on foreign deposits through FCNR accounts is also tax-free in India.
- Access to investments in India
A new introduction by RBI called the Fully Accessible Route (FAR) allows NRIs to invest in stock and debt markets in India. NRO accounts are ideal for managing and channelling income earned through such investments or other earnings like property rent.
- NRIs with Dependants
Special arrangements can be made for NRIs with dependents in India. It is possible to get remittances at quite reasonable rates, allowing people swift access to funds. It can be quite helpful to the elderly and infirm, who are often the dependents in such cases.
NRI accounts can help people who run businesses globally or need to manage their funds from overseas. One can open joint NRE and NRO accounts with another NRI. It would be wise to understand one’s requirements and choose a relevant NRI account in India.