Are you aware of the different types of NRI account?

What is an NRI account?

If you didn’t know, a non-resident Indian (NRI) may also run a bank account (savings/fixed deposit and/or current) in India. Such accounts are operated by a person of Indian Origin or an Indian citizen residing overseas. However, this access is restricted to NRIs and not foreign internationals. To establish and maintain an NRI bank account, households need not seek the permission from the Reserve Bank of India, they can simply come in contact with a bank holding the license to deal in foreign currency. There are now various types of NRI accounts in India, which provides users with a variety of options to choose from, with each type characterized uniquely.

The Types of NRI Account

Among the various types of NRI accounts prevalent in the country, the most common types include:-

1) NRO Account – a Non Resident Ordinary Rupee (NRO) Account, is a current or savings account in an Indian bank. This helps the NRI manage their earnings in India, including dividends, rent and pension from other countries. This account is operated just like another Indian resident’s account. The funds are reserved in Indian Currency and can only be repatriated by permission from the RBI. Interest on balances is accumulated, however it is subject to tax. This account is ideal for an NRI earning in India, constantly requiring to withdraw or deposit in the account with no intention of repatriation.

2) NRE Account – a Non Resident External Rupee (NRE) Account refers to the type of NRI account India which girdles to help in the assistance of depositing funds, to a financial entity in India. There is an agreement upon the conversion and/or transfer of these funds to Rupees from Foreign currency or vice-versa, in and outside India. Ergo, repatriation is feasible through this account, though the reserve is kept in Rupees. The account holder’s earnings on investments in any part of the world, can be credited to this account and the interest accrued is tax free. This account is ideal for an NRI who frequently has to send money to or from India.

3) FCNR Account – a Foreign Currency Non Resident (FCNR) Account is that type of an NRI account which enables the NRI to save their overseas deposits in an Indian bank as term deposits for up to a maximum period of 5 years. This is more like a fixed deposit of sorts, rather than a savings account and withdrawal before the time period, results in the payment of a penalty. The reserves are maintained in foreign currency and any interest or payment receipts earned are maintained in the same currency as well. However, it can also be made available in Indian Currency with existing exchange rates. The taxation policy remains the same as an NRE Account.

4) NRI Trading Accounts – a non-resident Indian trading account makes it a possible prospect to invest in the Indian trade market through depositing funds in this account. There are several sub-categories under this type of an account, namely – NRO Demat Account, NRE Demat Account, and Foreign National Demat Account.

A few Indian Banks providing such facilities to NRIs include – SBI, HDFC, ICICI, Central Bank of India, etc.


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