Different type of bank accounts for NRI in India – NRO, NRE and FCNR

Reserve bank of India allows a Non resident Indian or NRI to open and maintain different type of bank accounts in India. These bank accounts can only be opened with a bank which is authorized by RBI to deal in foreign exchange. Only NRO saving account can be opened either with a bank or post office.

Following type of bank accounts can only be opened by a NRI in India.

  • Non resident ordinary rupee or NRO A/c
  • Non resident (external) rupee or NRE A/c
  • Foreign currency non resident or FCNR A/c

bank accounts for NRI in India

NRO Account for NRI in India

Non resident ordinary or NRO account can be opened in the form of current, saving, recurring or fixed deposit by a person resident outside India with a bank or authorized dealer for the purpose of putting bona fide rupee transactions.

For all these accounts, banks are free to determine interest rates. Prior approval of RBI is not required except in cases where the individual or entities is either from Pakistan and Bangladesh.

For more details we request you to read how to open a NRO saving account in India

NRE Account for Non Resident Indian in India

Non resident external or NRE account is a saving A/c which can be opened by a NRI or POI and maintained in Indian rupees where foreign income earned outside India can be invested in. NRE account can also be opened as a current, recurring or fixed deposit.

To invest in NRE account, the Non Resident Indian or POI has to invest in rupees i.e. foreign currency has to be firstly converted in to Indian rupees before investing. Similarly while taking back money from NRE account; the NRI is required to convert it to foreign currency.

Interest earned on NRE account is also income tax and wealth tax free in India. It can be opened jointly with another NRI.

To open a NRE saving account in India you are required to submit self attested documents like passport copy and copy of valid work permit or employment visa or student visa. POIs can submit POI card or past Indian passport of self or parents or grandparents instead of a work permit or employment visa.

Such NRE account can also be operated by a resident for a limited purpose through a power of attorney.

Transactions permitted in a NRE account includes;

  • Inward remittance of foreign currency
  • Transfer from other NRE or FCNR Account
  • Proceeds from sale of FDI investments
  • Interest on NRE A/c and on government securities or dividends on units of mutual fund purchased by using NRE or FCNR A/c
  • Disbursement of funds in India
  • Transfer to other NRE or FCNR Account
  • Investment in shares or securities of an Indian company

Like in case of NRO account, current income in India can not be deposited in NRE account.

FCNR bank Account for NRI in India

Like NRE account, Non Resident Indians can also open foreign currency non resident or FCNR bank account in India. However, FCNR bank account can only be opened in the form of term deposit of 1 to 5 years in foreign currency and not in Indian currency.

Permissible Debit and credit transactions in NRE account is also allowed in FCNR (B) account and can be held in freely convertible foreign currency. Even FCNR account can be opened jointly with close resident relatives through a power of attorney.

Even after change in account holder’s residential status, NRI can continue his or her FCNR account deposits till maturity.

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