When residing outside your home country, it can get challenging to manage your finances in India as well as overseas. This is especially true if you are unaware of the available options. As a Non-Resident Indian (NRI), you have different banking needs. You can open different types of Bank Accounts in India. In this article, we will highlight who an NRI is and the accounts they can open in India.
Who is an NRI?
An Indian citizen who resides overseas for 182 days or more in one financial year is referred to as a Non-Resident Indian or NRI. Under FEMA, NRIs must open NRI Account online to engage in financial transactions in India. Various leading banks in the country offer such accounts. They are also packed with benefits and facilities that align with the requirements of NRIs.
Types of accounts
As an NRI, you can open the following accounts in India:
- Non-Resident External or NRE Account
- Non-Resident Ordinary or NRO Account
About NRE Accounts
An NRE Account is a rupee-denominated account that NRIs can open in India. The primary purpose of such an account is to deposit and save money you have earned overseas. The features of such an account include the following:
- You can easily open this NRI Account to invest in Mutual Funds in India.
- You can park the funds you earn overseas into this account and earn interest. In addition, the principal and interest are tax-free in India.
- The funds in this account, i.e., the principal and interest, are freely and fully repatriable.
- You can open this account jointly with an Indian Resident or another NRI.
About NRO Accounts
An NRO Account is a type of NRI Bank Account that enables NRIs to manage the funds they earn in India. The money deposited in such an NRI Account is maintained in Indian Rupee or INR. The various features of an NRO Account include the following:
- This account enables you to deposit income you earn in India. This may include dividend income, rent, pension income, etc.
- When you deposit funds in such an account, you can earn interest on the principal amount. You can also freely transfer or repatriate this interest. However, the interest earned is taxable.
- In the case of the NRO Account, you can repatriate a maximum of USD 1 million in a financial year to your country of residence. However, you must pay the applicable taxes before that.
- You can also deposit foreign currency into this account. However, the funds get automatically converted into INR.
- You can withdraw funds from this account in INR.
Conclusion
While NRIs work and reside overseas, they may still have other financial needs and require Bank Accounts in India. For this reason, banks have provisions to let them carry out NRI Account opening and opt for NRE or NRO Accounts based on their needs.
