Before looking for NRI minimum balance requirements, let us first explore why it comes into play.
Who is an NRI?
If you have lived abroad for more than 182 days and spent fewer than 365 days within the Indian territory in the last four years, you are an NRI. The reason for staying overseas can be for employment, business, vocation, or otherwise while remaining an Indian citizen.
In addition, if you are leaving India to work in another country, you are automatically deemed an NRI. As an NRI defined under the Income Tax Act, 1961, your financial transactions are subject to FEMA regulations.
Why Do You Need an NRI Account?
By pursuing your profession overseas, your earnings and resultant assets are in international currencies like the dollar, euro, yen, to name a few. The law mandates that you open an NRI account in Indian banks to hold and convert your securities and money into Indian Rupees.
You can open NRI accounts with your earnings abroad and in India to meet your investment goals and financial obligations regardless of your residency.
What Are the Different Types of NRI Accounts?
Having understood the different aspects of NRIs, let us look at what options you have to open accounts in Indian banks to meet your banking needs best. Accordingly, once your NRI status is confirmed, you have the option to open three types of accounts.
Though there are additional options within the broad categorization, the focus is on savings and term deposits. The three account types are – NRE (Non-Resident External), NRO (Non-Resident Ordinary), and FCNR (B) (Foreign Currency Non-Resident Bank) accounts.
Let us take a comprehensive look at each one of them.
-
NRE Account
It is one of the several NRI accounts where the source is your earnings abroad. Your deposited foreign currency in this account is converted to INR, and hence it is an Indian Rupee account. You can open savings or a term deposit account in this category.
The account’s salient features are:
-
Tax Benefits: The amount deposited in this account is not taxable. The interest earned is also exempt from taxes. (Tax benefits are subject to changes in tax laws.)
-
Repatriation Benefits: You can freely transfer the account balances to your country of residence in your preferred currency. There are no restrictions on the repatriation of funds from the account, and you are free to do so at will.
-
NRO Account
You can open an Indian Rupee saving or a term deposit account under this category. The primary difference between the NRO and the NRE account is the deposit that is sourced locally and not earned abroad as in the latter.
The income sources vary like dividends and rent from properties owned in India. The interest earned in this account is taxable, and you can repatriate up to USD 1 million in a given financial year.
The account’s standout features are:
-
Local Finances: Your NRO account is ideally suited to manage your local earnings and expenses. In addition, you can freely meet your local financial obligations through the account.
-
Joint Operation: You can open your NRO account jointly with a resident Indian for operational ease. However, the joint holder must be a close relative, and the operational instruction must be former or survivor.
-
FCNR (B) Account
Your choice in this account is limited to term deposit only and that too in designated foreign currencies. It fundamentally differs from the NRE and NRO accounts in the holding currency.
While they are in INR, the FCNR (B) account is an investment option in multiple foreign currencies like US Dollar, UK Pound Sterling, Japanese Yen, and Hong Kong Dollar. You retain your investment in a foreign currency of choice and repatriate the funds without restrictions.
Let us check out the salient features.
-
Tax Benefits: You are not burdened with the principal invested and the interest earned with tax liability. (Tax benefits are subject to changes in tax laws.)
-
Risk Mitigation: You are insulated from losses due to currency rate fluctuations since the balance is held in foreign currency.
Defined NRI Minimum Balance
After you have comprehensively understood the various banking services available to you in India, it is time to contend with the NRI minimum balance specified in accounts. It is essential to understand that no uniform formula defines the minimum balance regime.
Most banks employ the AQB (Average Quarterly Balance) or AMB (Average Monthly Balance) formula and impose penalties for default. Let us find out what most top banks have specified as the minimum balance in the NRI accounts.
| Bank Name |
Minimum balance in NRE/ NRO Accounts |
| AQB |
AMB |
| IndusInd Bank |
Rs.10000 |
|
| Federal Bank |
|
Rs.5000 |
| Kotak Bank |
Rs.10000 |
|
| RBL |
|
Rs.10000 |
| ICICI Bank |
|
Rs.10000 |
| HDFC Bank |
|
Rs.10000 *
Rs.5000 ** |
| SBI |
|
Rs.3000 *
Rs.2000 **
Rs.1000 *** |
| DCB |
|
Rs.10000 |
| BOB |
|
Rs.10000 |
| IDFC |
|
Rs.25000 |
| Axis Bank |
|
Rs.10000 |
| The minimum balance in the FCNR (B) Account is usually UDS 1000 |
Legend:
(*) Metro and Urban Branches
(**) Semi-Urban and Rural Branches
(***) Rural Branches |
The banks in the above grid have been chosen at random. Most private sector banks have a uniform minimum balance pattern across branches. While others and public sector banks define minimum balance according to the geographical location and the cities where the branches are located.
In Conclusion
Living abroad is a challenge and managing finances back home may weigh heavily on the NRIs. When operating accounts in India, you must meet the minimum balance requirements to keep your account active.
You can also consult your financial advisor to know the best suitable bank account for your financial operations in India.
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