NRI Account

Most NRIs will have earnings and savings in foreign currency, viz. dollars, euros, pounds, etc. Some myriad such individuals have banking and investment needs in India, and they would need a banking account that would cater to all their requirements. Many banks and financial institutions (FI) in India offer an NRI account facility for such individuals. These accounts provide services concerning remittances, currency exchange, taxation, etc.

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Disclaimer: #The investment risk in the portfolio is borne by the policyholder. Life insurance is available in this product. The maturity amount of Rs 1 Cr. is for a 30 year old healthy individual investing Rs 10,000/- per month for 30 years, with assumed rates of returns @ 8% p.a. that is not guaranteed and is not the upper or lower limits as the value of your policy depends on a number of factors including future investment performance. In Unit Linked Insurance Plans, the investment risk in the investment portfolio is borne by the policyholder and the returns are not guaranteed. Maturity Value: ₹1,05,02,174 @ CAGR 8%; ₹50,45,591 @ CAGR 4%. *Tax benefits and savings are subject to changes in tax laws. All plans listed here are of insurance companies’ funds.

Individuals who have been residing outside India for more than 120 days in a year and who have spent less than 365 days in India in the last 4 years can open these NRI bank accounts. Further, the individual must stay for a period below 4 years out of the last 10 years in India to be eligible for a Non-resident Indian (NRI) status. However, if an individual leaves India for employment in another country, such an individual is classified as NRI immediately.

What is an NRI Account?

An NRI Account refers to the accounts opened by an NRI or a Person of Indian Origin (PIO) or Overseas Citizen of India (OCI), with a bank or FI authorized by the Reserve Bank of India, to provide various banking services to NRIs. The full form of an NRI Account is a Non-Resident Indian Account opened with banks or other financial institutions.

NRIs may open NRI Accounts to deposit their income which may originate either from India or from any other country. The income source may be their employer or from an investment.

There are three types of NRI Accounts, as explained in the next section. It is essential to understand the salient features of the services offered under such NRI accounts by banks operating in India. This would help them meet their objectives, e.g., investment, remittance to resident dependents, payment of financial obligations, etc.

An individual of Pakistan or Bangladesh nationality residing in India can open only one NRI account with an authorized dealer bank if he fulfills the following conditions:

He belongs to minority communities in these countries (viz. Christians, Hindus, Sikhs, Buddhists, Jains, and Parsis), and
He has been permitted a long-term visa or awaits the result of an application for a long-term visa.

Types of NRI Accounts

The various types of NRI Accounts that one may opt for to meet one’s financial needs are:

Non- Resident Ordinary (NRO) Account

An NRO or Non-Resident Ordinary Account may be opened with earnings arising from India. The source of income can range from assets or investments in the form of rent, dividends, interest, etc.

Here are some important features related to the NRO account:
- Even though deposits can be in INR or any other foreign currency, the withdrawals can only be in Indian rupees in an NRO account.
- An NRO account can be operated jointly either with an Indian Resident or an NRI.
- Interest earned on the income in an NRO account is liable for taxation.
- Earned income from pension, rents, etc. can be sent through an NRO account.
- The main purpose of an NRO account is to house funds from the earned income in India or abroad.
Non-Resident External (NRE) Account

NRIs may initiate and maintain a Non-Resident External or NRE Account from their income originating in their country of employment/ residence.

Here are some key features related to NRE Account:
- The account shall be denominated in Indian Rupees.
- An NRE account can be in the form of a Current account, Savings account, Recurring Deposit account, or Fixed Deposit account.
- An NRE account can be operated jointly but only with another NRI.
- Deposits in an NRE account can be made of earnings from a foreign country only and not of earnings made in India.
- Withdrawals can be made in the currency in which the NRI resides in and therefore there is a possibility of amount fluctuation.
- Funds from one NRE account can be transferred to another NRE or NRO account easily.
- Income from the NRE account is tax-free as the principal and interest amounts are exempted from taxation.
- Investments in India can be made with the help of the NRE (Non-Resident External) account.
Foreign Currency Non-Resident (Banks) Account

Foreign Currency Non-Resident (Banks) Account or FCNR-B comprises bank deposits made by NRIs, PIOs, and OCIs. These deposits may be denominated in any one of the foreign currencies prescribed by the Reserve Bank of India.

Here are some key points related to an FCNR (Foreign Currency Non-Resident) account:
- The currencies in which FCNR-B deposits may be held in an Account are – US Dollars (USD), Great Britain Pound Sterling (GBP), Euro (EUR), Singapore Dollar (SGD), Hong Kong Dollar (HKD), Canadian Dollar (CAD), Australian Dollar (AUD), Swiss Franc (CHF) and Japanese Yen (JPY).
- Money can be deposited in an FCNR account in any currency approved by RBI.
- FCNR accounts are considered to be term deposit accounts and not savings accounts.
- Interest rates vary from the tenure of deposit and currency deposited in the FCNR account.
- The rate of interest is fixed in an FCNR account and does not fluctuate throughout the deposit tenure.
- In case of change in residential status, an account can be held till maturity but the interest rate may fluctuate as per bank guidelines.
- An FCNR account can be operated jointly either with a close Indian resident or an NRI.
- FCNR Account tenure ranges from 1 year to 5 years.
- Income from the FCNR account is tax-free as the principal and interest amounts are exempted from taxation.
- The rate of interest does not fluctuate in an FCNR (Foreign Currency Non-Resident) account because of the deposits and withdrawals made in foreign currencies.

Difference between various NRI Accounts

The key differences amongst the three types of NRI Accounts are as follows:

Particulars	NRE Account	NRO Account	FCNR-B Account
Purpose of account	Opened with income earned in the individual's country of employment/ residence and shall be denominated in Indian Rupee (INR)	Opened with income earned from within India from assets or investments, e.g., rent, dividend, interest, etc. and shall be denominated in INR	Opened with income earned in the individual's country of employment/ residence and shall be denominated in any of the foreign currencies stipulated by RBI
Types of accounts	Savings, Current, Recurring, Fixed Deposit	Savings, Current, Recurring, Fixed Deposit	Term deposit accounts with a minimum tenure of 1 year
Currency denomination	INR	INR	USD, AUD, CAD, HKD, EUR, SGD,GBP, JPY, CHF,
Joint holding facility	It may be held along with another NRI	It may be held along with an Indian resident or another NRI	It may be held along with another NRI
Tenure of fixed deposits	From 1 to 3 years. However, banks are allowed to accept NRE deposits above 3 years for Asset-Liability Management purposes	As applicable to resident accounts	1 to 5 years
Repatriation Facility	The balance can be entirely repatriated	Interest income can be fully repatriated.
The principal amount can only be repatriated to the extent of USD 1 million in a single financial year.	The entire balance can be repatriated
Exchange rate movements	Impacted by movement in existing exchange rates	No impact of the movement in existing exchange rates	Impacted by movement in existing exchange rates
Taxability	Interest income is exempted from tax	Interest income is taxable	Interest income is exempted from tax

How to Open an NRI Account?

Opening an NRI Account is a relatively simple process with minimal hassles. The following individuals are eligible to open NRI Account:

Step 1: Individuals on official deputation abroad by the Government of India or any Public Sector Undertaking.
Step 2: Indian citizens residing abroad for business, studies, and employment.
Step 3: Individuals who held an Indian passport, any time
Step 4: Individuals whose grandparents or parents were Citizens of India as per the India Citizen Act, 1955
Step 5: NRIs, PIOs, OCIs, and their spouses

To open an NRI account, one may visit the nearest branch of an authorized bank when in India. Alternatively, one may provide contact details to the authorized bank to assist with account opening. Some banks also provide facility to open NRI account online. In such cases, the individual may apply for the NRI account online through the bank's website by filling the account opening form online and uploading the scanned copy of the required documents. The details of some of the best banks for NRI accounts in India are provided later on this page.

The Documents required for Opening an NRI Account

Copy of valid passport includes pages with basic details such as name, address, date of birth, photograph, and signature, and details such as date of issue, place of issue, expiry date, and observation page if any.
Any document confirming the Indian or overseas address.
NRI status proof by way of valid Employment Permit / Residence Visa/ Student Visa.
Copy of PAN card or Form 60
Proof of Overseas and Indian Address.
Recent passport size colored photograph.
Payment cheque or DD from the individual’s bank account equivalent to the amount required to maintain the Average Monthly Balance in the account.
If the individual is unable to visit the branch for account opening, he can go to the Indian Embassy in the country of residence or Notary or by a Banker and get the documents and their photocopies attested.

Advantages and Core Benefits of Opening NRI Account

Here is a rundown of the key advantages and core benefits offered if an individual opens an NRI account:

Enables Inward Remittances

One of the primary benefits of the NRI account is that NRIs can repatriate their income to their dependents in India. For example, Mr. Aayush is employed in San Jose, USA, but his father, a dependent individual, stays in Mumbai. He remits USD 2000 every month in his NRO Savings Account to meet his father’s daily expenses. The balance in this NRO account is denominated in Indian Rupees. Assuming an exchange rate of 1USD = Rs.75, the remittance of USD 2000 would be denominated as Rs. 1,50,000 in the NRO Account.
Assures Continuity of Income

One of the benefits of the NRI account is that NRIs can continue to earn income from their assets in India. For example, Ms. Manasi, who is residing in London, Great Britain, has a residential flat in Bengaluru, which she has leased to Mr. Kishore. To receive rental income from the lease, Ms. Manasi may direct Mr. Kishore to deposit the monthly rent in an NRO account opened with a bank in Bengaluru.
Enables Investment in India

NRIs can invest in Indian investment avenues such as equity, mutual funds, debt instruments, etc., through the NRI account. These investments are facilitated through the Portfolio Investment Scheme (PIS), a scheme enabled by the Reserve Bank of India, through banks and FIs, to facilitate trading and investments by NRIs in India.
Avoidance of Exchange Rate Fluctuations

The deposits made by NRIs from their income earned in a foreign country in an FCNR-B account need not be converted into INR. This facility allows NRIs to mitigate the risk of foreign currency rate fluctuations and the resultant reduction in deposit value.
Attractive Returns

NRIs can earn interest income at attractive rates by investing in NRI accounts such as NRE FDs or FCNR-B deposits. Interest rates in India have been higher than in many western countries for many years.
No Tax Liability

Interest income on NRE and FCNR (B) accounts does not have any tax liability under the Income Tax Act 1961.
Loan Facility

The authorized bank/ FI can sanction loans in India to the NRI account holder or any third party against the security of the money deposited in the NRI account. The term ‘loan’ would include all types of fund-based/non-fund-based facilities.

Some Banks that offer NRI Accounts

Before choosing a bank to open an NRI account, one of the primary factors to consider is whether it can be operated from the country of residence of the NRI. We highlight below features of products offered by five banks that are considered to be the best NRI banks in India:

State Bank of India
- NRE/ NRO Savings Account in INR
- The monthly average balance of Rs. 10,000/-
- Interest rates at 2.70% p.a. for balances equal to or above Rs.1 lakh and 2.70% p.a. for balances below Rs.1 lakh.
- The account can be jointly opened by NRIs/ OCIs /PIOs with resident Indians on a "former or survivor" basis.
- Multi-city cheque book facility
- Debit Card for use in India
- Internet banking facility
- The facility of INR loan against NRO deposits
- Interest rates on deposits < Rs.2 Crore (depending on the tenure)
- NRE Deposits: 5.00% to 5.40% p.a.
- NRO Deposits: 2.90% to 5.40% p.a.
HDFC Bank
- NRE/ NRO Savings Account in INR
- The monthly average balance of Rs. 10,000
- Interest rates at 3.00% p.a. for balances below Rs.50 lakhs and 3.50% p.a. for balances equal to or above Rs.50 lakh
- One can use the account to repatriate outside India.
- One can also transfer money to the NRE account under current income under the 1 million USD scheme.
- Transfer funds from the overseas account in foreign currency
- Deposit cash or traveler’s cheques in foreign currency
- Easily withdraw cash or carry out payments in India with a debit card.
- Facility to get Add-on debit card for a mandate for POA holders
- Repatriate up to USD 1 million in a financial year
- Interest rates on deposits < Rs.2 Crore (depending on the tenure)
- NRE Deposits: 2.50% to 5.60% p.a.
- NRO Deposits: 2.50% to 5.60% p.a.
ICICI Bank
- NRE/ NRO Savings Account in INR
- The monthly average balance of Rs. 10,000 at the account level or Rs. 25,000 for multiple accounts in a single Customer ID
- Interest rates at 4% p.a. for balances equal to or above Rs.50 lakhs and 3.50% p.a. for balances below Rs.50 lakhs
- International Debit card
- 24x7 phone and internet banking
- Free money transfers at competitive exchange rates
- Free cheque book and mandate card for the family resident in India
- Interest rates on deposits < Rs.2 Crore (depending on the tenure)
- NRE Deposits: 4.90% to 5.60% p.a.
- NRO Deposits: 2.50% to 5.60% p.a.
Axis Bank
- NRE/ NRO Savings Account in INR
- Monthly average balance requirement of Rs. 25,000
- The interest rate on Savings accounts: up to 3% p.a.
- Daily Cash Withdrawal of Rs. 40,000
- Shopping Limit of Rs. 2 Lakh (NRE) and Rs. 1 Lakh (NRO)
- Visa Platinum Debit Card with Free Personal Accident cover of Rs 2 lakhs (NRE) and Rs. 1 Lakh (NRO)
- Unlimited free transactions at Axis Bank ATMs and 10 free transactions at other bank ATMs.
- Interest rates on deposits < Rs.5 Crore (depending on the tenure)
- NRE Deposits: 5.10% to 5.75% p.a.
- NRO Deposits: 2.50% to 5.75% p.a.
Kotak Mahindra Bank
- NRE/ NRO Savings Account in INR
- Low Average Monthly Balance of Rs. 10,000/- only
- Interest on daily closing balance @ 3.5% p.a. and paid quarterly
- Competitive foreign exchange rates for transactions above USD 10,000/-
- Free repatriation of deposits, including Interest
- International Debit Card with anytime access to the bank account both in India and abroad
- At Par Cheque book facility
- 24/7 phone banking access
- Internet Banking
- Sweep-in & Sweep-out facility
- NRIs or PIOs can jointly open this account with Resident Indians
- Investment advisory facility
- Easy remittances into India by wire transfer or cheque
- Interest rates on deposits < Rs.2 Crore (depending on the tenure)
- NRE Deposits: 4.35% to 4.70% p.a.
- NRO Deposits: 2.50% to 5.30% p.a.

Disclaimer: Policybazaar does not endorse, rate, or recommend any particular insurer or insurance product offered by an insurer.

*All savings are provided by the insurer as per the IRDAI approved insurance plan. Standard T&C apply.

†Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by any insurer. This list of plans listed here comprise of insurance products offered by all the insurance partners of Policybazaar. The sorting is based on past 10 years’ fund performance (Fund Data Source: Value Research). For a complete list of insurers in India refer to the Insurance Regulatory and Development Authority of India website, www.irdai.gov.in

Past 10 Years' annualised returns as on 01-11-2024

^The tax benefits under Section 80C allow a deduction of up to ₹1.5 lakhs from the taxable income per year and 10(10D) tax benefits are for investments made up to ₹2.5 Lakhs/ year for policies bought after 1 Feb 2021. Tax benefits and savings are subject to changes in tax laws.

*All savings are provided by the insurer as per the IRDAI approved insurance plan.

Tax benefit is subject to changes in tax laws. Standard T&C Apply
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^^The information relating to mutual funds presented in this article is for educational purpose only and is not meant for sale. Investment is subject to market risks and the risk is borne by the investor. Please consult your financial advisor before planning your investments.

#The investment risk in the portfolio is borne by the policyholder. Life insurance is available in this product. The maturity amount of Rs 1 Cr. is for a 30 year old healthy individual investing Rs 10,000/- per month for 30 years, with assumed rates of returns @ 8% p.a. that is not guaranteed and is not the upper or lower limits as the value of your policy depends on a number of factors including future investment performance. In Unit Linked Insurance Plans, the investment risk in the investment portfolio is borne by the policyholder and the returns are not guaranteed. Maturity Value: ₹1,05,02,174 @ CARG 8%; ₹50,45,591 @ CAGR 4%

¶Long-term capital gains (LTCG) tax (12.5%) is exempted on annual premiums up to 2.5 lacs.

**Returns are based on past 10 years’ fund performance data (Fund Data Source: Value Research).