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What are the NRI banking accounts that you should be aware of?

Many Indians who have travelled abroad and settled down, still have ties back to members back in their home country. This also includes the exchange of funds when required or on a regular basis. While this can be done through specialised NRI banking systems such as the NRI bank accounts, there will always remain the fact that most NRI’s are not completely aware of the different features of these accounts.
But why is it crucial to select the right banking account? For one, each account has different features and different requirements. It also has different means of taxations, which can affect your investments. To ensure that you are well aware of the different features of the NRI accounts and the NRI banking, given below is a brief review of the different accounts:

NRE Account (Non-Resident External Account):

• Any NRI can open this account.  It can also be held as a single account, or a joint account with another NRI. When opening this account with another NRI, the account holder may add the name of the Resident Indian in the account, with an added clause. This clause allows the primary account holder to use the account, wherein which, upon his or her death, theanother joint account holder has the right to operate the account.
• An NRI can open this account, but it must be held in foreign currency. It can also be used to remit funds in INR from abroad. The funds in this account are fully repatriable to the destination country where the NRI resides. However, the value of the currency is subjected to exchange rates of the currency at the time of such transfer
• The withdrawals made from this account can be used to make local payments.
• The account may be opened under the categories of savings, current or fixed deposit.
• The interest that is earned in this account is exempted from income tax
• The account holder can also take a loan against this account, in the INR currency.

NRO Account (Non-Resident Ordinary Account):

• Any NRI can open this account. It can also be heldas a single account or a joint account with another NRI. Alternatively, a Resident Indian can be added to this account.
• The account must be held in INR currency. The funds can be used to remit funds from abroad. The limit amount of up to One Million US dollars or equivalent can be repatriated to the country where the NRI resides. The value of the currency is also subjected to exchange rates of the currency at the time of transfer of funds
• The withdrawal from this account can be used to make local payments.
• The account may be opened under the categories of savings, current or fixed deposit.
• The interest that is earned on this account is not exempted from income tax.
• The account holder can also take a loan against this account, in the INR currency.

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