When you’re thinking about moving abroad, there are a lot of considerations to be taken into account. One of the most important points that need urgent attention is banking.
Whatever country you decide to move to, opening a bank account there will be a matter of necessity. But that begs the question of what happens to your accounts in India. That’s where NRI accounts come into picture.
An NRI bank account is a bank account maintained in India by NRIs. These accounts have features that set them apart from normal banking accounts. These accounts can be used to maintain income earned in India. They can also be used to earn higher interest on foreign incomes. It is possible for you to open a fixed deposit account, by opening a Foreign Currency Non Resident (FCNR) account if you want to earn in foreign currency on your deposits.
The different types of NRI accounts are:
1. Non Resident External (NRE) account
2. Non Resident Ordinary (NRO) account
3. Foreign Currency Non Resident (FCNR) account
3 reasons why you need an NRI bank account are:
1. They can help to earn income on Indian assets:
Non-Residents can convert their regular savings account to an NRE account. This NRI account is useful for accumulating income earned from sources in India, such as interest income on investments, dividend income, rental income. Since non-residents are not allowed to hold normal savings accounts, they need an NRI bank account to ensure there is an account to accumulate all such earnings. It is possible to repatriate from this account once tax has been paid on the income earned.
2. It allows you to invest your foreign earnings in India:
For a non-resident to invest foreign earnings in India, they need to accumulate the earnings in an NRO account. If you plan to invest foreign funds in the stock markets, or purchase property, the right way to do it will be to open an NRO account. Having this NRI bank account will help you collect your funds from abroad and invest them in different investment avenues in India.
3. Non residents cannot maintain a regular bank account:
As per Foreign Exchange Management Act (FEMA), a non-resident is not allowed to maintain a regular savings or current bank account. If you are planning to move abroad, you will have to convert your regular savings account into an NRI bank account. It is possible for an NRI to open different NRI accounts to fulfill different purposes. Once you become a non-resident, you will have to convert your regular savings account to an NRO account and open an NRE account for investment purposes.