What is an NRI Account?
An NRI (Non-Resident Indian) Account is a special type of bank account that NRIs or Persons of Indian Origin (PIOs) can open with authorized banks in India. It allows NRIs to manage their financial transactions in India while living abroad.
To open an NRI account in India, you must be an Indian citizen residing abroad for employment, business, or other reasons. You should have lived outside India for at least 182 days in the preceding financial year.
List of NRI Accounts:
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NRE (Non-Resident External) Account: For income earned outside India, this account is fully repatriable and offers tax exemptions in India.
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NRO (Non-Resident Ordinary) Account: Used for managing income earned in India, such as rental income or dividends. Repatriation is allowed, but with certain restrictions.
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FCNR (Foreign Currency Non-Resident) Account: This account holds deposits in foreign currencies, offering protection against exchange rate fluctuations.
Types of NRI Accounts
The various types of NRI Accounts that one may opt for to meet one’s financial needs are:
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Example:
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Mr. Sameer, working in Dubai, sends AED 7,000 every month to support his family in Delhi. With the exchange rate of 1 AED = 22 INR, his monthly remittance is deposited as ₹1,54,000 in his NRE Account.
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Example:
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Mrs. Priya, residing in Toronto, Canada, rents out a flat in Bengaluru. The rent, which is ₹50,000 each month, is directly deposited into her NRO account in INR, with no currency conversion.
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Who can open: NRIs or Persons of Indian Origin (PIO) with income from their country of residence.
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Currency: Deposits are held in foreign currencies prescribed by the RBI (e.g., USD, CAD, AUD, EUR, GBP, SGD, HKD, JPY).
Example:
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Mr. Raghav, who works in London, earns a salary in GBP. He opens an FCNR (B) account to hold his deposit in GBP, without converting it to INR. If Mr. Raghav were to earn in any other currency, the deposit would be converted into one of the prescribed currencies.
Difference Between Various NRI Accounts
The key differences among the three types of NRI Accounts are as follows:
| Particulars |
NRE Account |
NRO Account |
FCNR-B Account |
| Purpose of Account |
Income earned outside India, in INR |
Income earned in India, in INR |
Income earned outside India, in foreign currency |
| Types of Accounts |
Savings, Current, Recurring, Fixed Deposit |
Savings, Current, Recurring, Fixed Deposit |
Term Deposit (min. 1 year) |
| Currency Denomination |
INR |
INR |
USD, AUD, CAD, HKD, EUR, SGD, GBP, JPY, CHF |
| Joint Holding Facility |
With another NRI |
With an Indian resident or NRI |
With another NRI |
| Tenure of Fixed Deposits |
1 to 3 years (may extend for ALM purposes) |
As applicable to resident accounts |
1 to 5 years |
| Repatriation Facility |
Entire balance can be repatriated |
Interest income repatriable, principal up to USD 1 million |
Entire balance can be repatriated |
| Exchange Rate Movements |
Affected by exchange rates |
No impact of exchange rates |
Affected by exchange rates |
| Taxability |
Tax-free (Principal + Interest) |
Taxable (Interest income) |
Tax-free (Principal + Interest) |
| Other Features |
Easy transfer to NRO/NRE accounts |
Suitable for income earned in India (rent, dividends, etc.) |
Interest is fixed and tax-free; suitable for long-term deposits |
Eligibility Criteria to Open a NRI/ PIO Account
To open an NRI account, you must meet the following eligibility criteria:
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NRI Eligibility:
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You should have stayed outside India for at least 182 days in the last financial year (April to March); or
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You were in India for 60 days or more during the previous financial year, and 365 days or more during the four years immediately preceding the previous financial year.
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You must be an Indian citizen living outside India for work, business, study abroad, seafarers, or other reasons.
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Exceptions apply if you plan to stay abroad indefinitely.
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PIO Eligibility:
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You held a valid Indian passport at any time; or
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You must be a citizen of a country other than Pakistan, Bangladesh, or any other notified country; or
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You or your parents/grandparents should have held an Indian passport; or
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Your spouse should be an Indian citizen.
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NRIs and PIOs have the same eligibility to conduct financial transactions in India.
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Common Requirements:
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Age: You must be at least 18 to open an account yourself.
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Documents: You need a valid passport, visa, proof of your overseas address, and recent photographs.
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Compliance: You must follow FEMA rules and other applicable laws.
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Additional Notes:
How to Open an NRI Account?
Opening an NRI account is a simple process if you follow the steps below:
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Choose the Right Bank: Look for a bank that offers dedicated NRI services to guide you through the process. Some popular options include- Bank of Baroda, Axis Bank, IDFC FIRST Bank, PNB Bank, SBI Bank, and ICICI Bank.
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Select the Account Type: Choose the type of NRI account you need- NRE Account (Non-Resident External), NRO Account (Non-Resident Ordinary), and FCNR Account (Foreign Currency Non-Resident).
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Gather Required Documents: Collect the necessary KYC documents to avoid delays.
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Application Process (Online or Offline): You can open the account either online (if the bank allows) or by visiting the bank branch:
Online Process:
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Visit the bank’s official website and go to the NRI account page.
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Click "Open NRI Account" and register.
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Complete the online application form.
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Upload the form along with attested KYC documents.
Offline Process:
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Visit the nearest branch of your bank.
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Ask for the NRI account application form.
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Fill out the form and submit necessary documents, like address proof and PAN card.
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Verification and Activation: The bank will verify your documents. Some banks may offer document pick-up services. Ensure you comply with KYC norms for smooth account activation.
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Convert Existing Resident Account (if applicable): If you have an existing resident Indian account, you must convert it to an NRO account or close it before opening a new NRE/NRO account.
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Minimum Deposit Requirement: Some banks may require a minimum deposit to activate your NRI account. Ensure you check the bank’s specific requirements.
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Fund Your Account: Once your account is active, transfer funds from your home country or make international remittances to begin using the account.
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:
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Enables Inward Remittances
NRI accounts allow easy remittance of funds to dependents in India. For example, Mr. Aayush, working in the USA, sends USD 2000 monthly to his father in Mumbai. This amount is converted into Indian Rupees (INR) in his NRO account. At an exchange rate of 1 USD = Rs. 75, his remittance would be Rs. 1,50,000.
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Assures Continuity of Income
NRIs can continue to earn income from assets in India like rental income. Ms. Manasi, living in London, rents her flat in Bengaluru. She can instruct the tenant to deposit the monthly rent directly into her NRO account in Bengaluru.
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Enables Investment in India
NRIs can invest in a range of Indian financial products, including equities, mutual funds, and debt instruments. These investments are facilitated through the Portfolio Investment Scheme (PIS), a Reserve Bank of India (RBI) initiative.
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Avoids Exchange Rate Fluctuations
Deposits made in an FCNR-B account are held in foreign currency and do not need to be converted into INR. This helps NRIs avoid the risks associated with exchange rate fluctuations, ensuring the value of their deposits remains stable.
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Attractive Returns
NRI accounts, such as NRE Fixed Deposits (FDs) and FCNR-B deposits, offer attractive interest rates. India’s interest rates have generally been higher compared to many Western countries, providing better returns on investments.
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No Tax Liability
Interest earned on NRE and FCNR (B) accounts is tax-free under the Income Tax Act of 1961, making it a favorable option for NRIs seeking to grow their savings without worrying about tax deductions.
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Loan Facility
NRIs can avail loans in India against the funds deposited in their NRI accounts. These loans can be granted to the account holder or third parties, including both fund-based and non-fund-based financial facilities.
Some Banks that Offer NRI Accounts
Below are the features of NRI accounts offered by five banks that are considered to be the best NRI banks in India:
| Bank |
Minimum Balance |
Online Banking |
Currency Options |
Additional Features |
| SBI Bank |
₹1 lakh (Metro/Urban), ₹50,000 (Semi-Urban/Rural) |
Yes (SBI YONO) |
INR, USD, GBP, EUR, JPY |
International debit card, multi-city cheque book, tax-free interest |
| PNB Bank |
₹10,000 (NRO), ₹5,000 (NRE) |
Yes (PNB Internet Banking) |
INR, USD, GBP, EUR, JPY |
Easy remittance services, Tax exemptions for NRE |
| ICICI Bank |
₹25,000 (account level), ₹10,000 (customer ID level) |
Yes (ICICI iMobile, ICICI Bank Net Banking) |
INR, USD, EUR, GBP, JPY |
Tax-free interest, full repatriability, smart payments for bills |
| Axis Bank |
₹10,000 to ₹25,000 |
Yes (Axis Bank Mobile App, Net Banking) |
INR, USD, EUR, GBP, JPY |
Air Accident Cover, Personal Accident Insurance, preferential rates on remittances (Mariner Account) |
| HDFC Bank |
₹5,000 (Rural), ₹10,000 (Urban) |
Yes (HDFC NetBanking, Mobile Banking) |
INR, USD, EUR, GBP, JPY |
International debit card, competitive interest rates |
Documents Required to Open an NRI/ OCI/ PIO Account
An NRI, OCI, or PIO must have the following documents to open an NRE/ NRO/ FCNR account:
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Valid Passport
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Visa
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Overseas Address Proof (such as a utility bill or rental agreement)
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Indian Address Proof (if any)
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Passport-size Photographs
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Foreign National ID Card (if any)
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PAN Card (if applicable)
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Proof of NRI/ OCI/ PIO Status
Summing It Up
NRI accounts provide excellent benefits for non-resident Indians who wish to manage their finances in India. With options like NRE, NRO, and FCNR accounts, you can enjoy advantages such as tax-free interest, easy repatriation of funds, and currency flexibility. Each account type is designed to meet different financial needs, whether it is for savings, income management, or investment. It is important to choose the right account based on your specific requirements to make the most of your NRI banking experience.
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