With the number of Indians staying abroad, it has become important for them to have a Non-Resident Indian or NRI account. No matter whether you are residing abroad for business, employment or vocation purpose, it is vital to have an NRI account. When it comes to opening an account, ensure it is authorised by the Reserve Bank of India (RBI). There are great benefits associated with opening an NRI account. One of the greatest benefits is that it helps you earn tax-free interest in India.
Who can Open an NRI Account?
As the name suggests, it is solely made for Non-Resident Indians. In simple terms, individuals who are living abroad for employment should open an NRI account. Furthermore, the account can be maintained either in the rupee, or any currency, like the dollar, pound, euro, sterling and so on. An NRI can easily, maintain, hold, open and maintain various banks accounts with an authorised bank. It makes easier to deal with the foreign exchange.
Know the Different Types of NRI Accounts
Non-Resident External (NRE):
One of the different types of an NRI bank account is Non-Resident External (NRE). This account type can be opened as current, savings, fixed or even recurring deposit account. Maintained by Indian Rupees (INR), all the deposits of foreign exchange done at NRE account are converted to Indian Rupees by the banks at the buying rate. One of the greatest benefits of NRE account is that the interest earned from this account is completely exempt from the income tax. Furthermore, this account type can be held jointly by more than one NRIs.
Non-Resident Ordinary (NRO):
The funds or money held in Non-Resident Ordinary (NRO) are in Indian Rupees just as NRE account. Furthermore, this account too can be savings, fixed, term or current. A regular bank account too can be converted into an NRO account in case the person becomes an NRI. The main difference between NRO and NRI account is that a person cannot repatriate money from the NRO account. In simple terms, the funds held in the NRO account has to be used for local payment and in Indian Rupees.
Foreign Currency Non-Resident (FCNR)
Another type of NRI account India is Foreign Currency Non-Resident (FCNR). This account can be opened in the form of term deposit. The maturity of this account ranges from one to three years. The currency used in this account is US dollars, Euro, Pounds Sterling and Japanese Yen. All the interest and principal earned on this account can be transferred outside India in the same currency or convertible currency. FCNR account can be opened either jointly with a close relative or survivor basis.
These are the top three types of NRI accounts. Choose the one that best meets your needs.