NRIs or Non-resident Indians, are legal citizens of India who at present are residing in different countries. They earn in foreign currencies such as US Dollars, Pound, Euros, etc., and have overseas bank accounts. However, they may need to open a bank account in India to meet their family’s financial requirements
For such individuals, several Indian banks offer NRI bank accounts that provide facilities to open bank accounts based on their earning currencies, ease of transferability, tax and more. Let’s dive deeper into the details and type of NRI accounts and how they benefit Indians residing outside the country.
What is an NRI Account?
An NRI account is a type of bank account available for NRIs, PIO (Person of Indian Origin), OCI (Overseas Citizen of India). It can be opened at any bank or financial institution authorised by the Reserve Bank of India (RBI) to provide various banking services for Indians living abroad.
An individual outside India can open an NRI account and deposit funds in any eligible currency that may originate in India or abroad via their employer or any form of investment. When opening an NRI account, it is crucial to understand the features of these accounts as it will help them fulfil their financial needs, such as meeting their financial obligation, remittance to dependant family members, and investment.
Who can open an NRI Account?
While the eligibility varies from bank to bank, here are a few common criteria an individual must satisfy to open an NRI account.
- Must be employed, own a business or any form of trade in a foreign country.
- Individuals working for shipping companies, oil rigs or airlines that require them to stay outside India for more than 182 days.
- Any government employee holding a diplomat passport.
- Students pursuing education abroad.
If you are an individual working or residing abroad, you can choose an IDFC FIRST Bank NRI account as it offers attractive benefits and wealth growth. Using this account, you can transfer funds round the clock without interruption.
You can also choose from a range of NRI accounts: IDFC FIRST Bank NRE, NRO and Seafarer Savings Account.
Various types of NRI Bank Accounts
Indian banks and financial institutions offer numerous NRI accounts based on individual requirements. Following are the various types of NRI bank accounts in India.
- Non-Resident Ordinary Account (NRO Account)
An NRO account can be opened by an individual whose income arises from India. The income source can be rent, investment, dividends, or interests from funds. An NRO account can be opened in INR and other foreign currencies, but withdrawals are allowed only in INR.
These accounts can be operated jointly with a resident Indian or an NRI. However, the interest earned in an NRO account is liable for taxation as per Indian tax regulations. These accounts are ideal for sending funds from rent, pensions etc.
- Non-Resident External Account (NRE Account)
Indians residing abroad can open and operate an NRE account for their income in another country or the country of their employment or residence. Deposits in an NRE account can be made for earnings made in a foreign country that is not originating in India.
Moreover, the account is denominated in Indian Rupees only. NRE accounts offer the flexibility to be opened in any form, i.e., current account, savings account, recurring deposit account, or fixed deposit account. These accounts allow withdrawals in different currencies (Based on the country where the individual is residing), and fluctuation can occur depending on the exchange rates. An NRE account is tax-free and opens the door to investment in India.
- Foreign Currency Non-Resident Bank Account (FCRN-B Account)
Deposits in an FNCR account can be made by PIOs, OCIs and NRIs in any currency denomination as prescribed by the Reserve Bank of India. These accounts are typically considered term deposit accounts rather than savings accounts.
The tenure of these accounts ranges between 1 to 5 years, and the offered interest rate does not fluctuate over the entire term. Like an NRE account, the funds in the FCNR-B account are tax exempted.
Advantages of an NRI Account
An NRI account accompanies several benefits to the account holder and offers ease of transferring funds to the home country. Here are a few advantages of opening an NRI account.
- Facilitate investments
One of the most significant advantages of an NRI account is that it opens various investment opportunities in India, such as stock trading and various investment schemes through NRI investment portfolios.
- Tax benefits
Individuals with NRE and FCRN-B accounts are exempted from taxation per the Income Tax Act, 1961.
- Decent returns
NRI accounts such as NRE FDs and FCNR offer high, risk-free returns since these accounts are not associated with stock market performance in any form.
- Avoiding exchange rate fluctuations
FNCR accounts help deposit funds from foreign countries without implying any exchange rate conversion to INR. Hence, your hard-earned money is not consumed by exchange rate fluctuations.
Several banks and financial institutions in India offer NRI accounts designed to meet their financial requirements. These accounts provide ease of remitting money to India and open numerous investment opportunities. However, before opening an NRI account, you must ensure your eligibility and go through the terms and conditions of the account.