3 Different Types of NRI Accounts in India

Confused about selecting the right NRI bank account in India? Three different types of NRI accounts are discussed in this post to help you make the right selection.

With the increasing number of Indians moving to foreign countries, the need for repatriation, savings, investments, and fund transfer has also significantly increased among NRIs. To keep up with the growing requirements of the NRIs, top Indian banks now offer many different types of bank accounts.

As an NRI, you should thoroughly understand these accounts so that you can make the right selection. Three different types of NRI account in India are as below-

  1. NRE Account

NRIs use the NRE or Non-Resident External account for transferring their foreign earnings to India. It is an Indian denomination account where the transferred foreign currency is converted into INR as per the current exchange rates. Note that NRE accounts do not allow INR deposits in India.

The interest earned from an NRE account is tax-free, and account holders can also freely repatriate the principal as well as the interest income to their current country of residence. Apart from savings, you can also open an NRE current, FD (Fixed Deposit), or RD (Recurring Deposit) account. But if you want to open a joint NRE account, you can only do it along with another NRI or resident Indian.

  1. NRO Account

The Non-Resident Ordinary or NRO account is for NRIs having income sources, like rent, dividends, etc. in India. While the account also allows foreign currency deposits, it is mostly used by NRIs for managing their Indian income.

NRO account is also an interest-bearing account, but the interest is taxable as per the applicable tax laws in India. NRIs can fully repatriate their entire interest after deducing tax, and only up to USD 1 million of the principal amount can be repatriated in a financial year. You can open NRO savings, current, FD, or RD account. With an NRO account, the joint holder can be an NRI or even a resident Indian.

  1. FCNR Account

The FCNR or Foreign Currency Non-Resident Account is a type of term deposit account exclusively designed for NRIs. The account is maintained in foreign currencies, like USD, GBP, JPY, EUR, etc. that are freely convertible. If at all the foreign income of an NRI is not in one of these currencies, the funds will first be converted to an eligible currency of their choice.

The maturity of FCNR accounts ranges from 1 year to 3 years in most top banks. The deposit, as well as the interest amount, is tax-free and fully repatriable either in the currency in which the account is maintained or any other freely convertible foreign currency.

Selecting the Right NRI Bank Account

As can be seen above, all the different types of NRI accounts in India have their purposes, benefits, and rules. The NRIs must understand the differences so that they can select an account that best matches their requirements.

NRIs can also consider consulting a reputed bank that offers a host of NRI banking products and services to get the required help for making the right account selection.

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