All About NRI bank accounts in India

If you are going abroad for a job or planning to migrate to another country for some years, your status will be changed to Non Resident Indian (NRI)

As an NRI, you will enjoy certain privileges in India. But please do the necessary paperwork, before you proceed to your dream country to make your financial life easy. Let us discuss the various types of NRI bank accounts in India and their specifications.

NRI bank accounts in India

1.   NRO Account

Once you become an NRI, you cannot hold a normal savings bank account in India. Your existing bank account will be converted to an NRO account (Non Resident – Ordinary).  The bank can retain the same account number even after conversion to NRO.

NRO account can be Savings account, Current account or even term Deposit. The money in NRO account is held in Indian Rupees. This account can be used to deposit your income from Indian sources like pension, rent, dividends etc. You can use this account to make payments in Indian Rupees like EMIs. You can have this account jointly with another NRI or with a resident Indian.

But you cannot transfer money from NRO account to NRE accounts. The interest income from NRO account is taxable. You can effect nomination in this account and on your return to become a resident of India, this account will be converted to a resident account.

Repatriation of amount from NRO account:

Authorized Dealers can allow remittance upto USD 1 million, of balances in NRO accounts/of sale proceeds of assets on production of an undertaking by the remitter together with a certificate issued by a Chartered Accountant in Annexure A and B as prescribed by the Central Board of Direct taxes (CBDT). In the case of repatriation of sale proceeds of immovable property by NRIs can allow repatriation thereof even if the immovable property was held by the NRIs/PIOs for less than 10 years provided the cumulative period of holding of the immovable property in India and retention of the sale proceeds of the property in the NRO Account is not less than 10 years.

2.   NRE Account

Non Resident (External) Account or NRE Account is most useful for crediting your income from abroad. This is the most popular NRI bank account in India. You can freely repatriate any amount in your NRE account. The money in this account is held in Indian Rupees. NRE account can be Savings account, Current account or even Term deposit. You can have nomination in this account.

You can open NRE account by depositing foreign currency or using travelers’ cheque.

You can transfer money from NRE account to NRO account without any restriction. Another attraction of NRE account is that, the interest earned in it is totally tax free.

If you are returning to India and become a resident, NRE account will be converted to an ordinary resident account.

3.   FCNR Account

Foreign Currency Non Resident Account (FCNR account) is a term deposit held by an NRI in a foreign currency. You can have this account in any foreign currency, which is freely convertible.

Foreign Currency Non Resident (FCNR) account can be a good option for Non Resident Indians (NRIs) looking to invest in India without worrying about currency risks. Deposits from 1 year to 5 year are available in this account.

You can open this FCNR account by transferring money from your NRE account or using foreign currency.

Balance in the FCNR account can be freely repatriated outside India. You can have nomination facility in FCNR account. The interest is tax free in India, but you may have to pay tax in the country of your residence.

For more details on various NRI bank accounts in India click on the RBI link below:

http://www.rbi.org.in/scripts/faqview.aspx?id=52