NRI Account: Meaning, Types, and Eligibility Explained

It is an ideal choice for those NRIs who earn an income outside India but want to have the flexibility to access funds in Indian currency. A stand out feature of the NRE account is that the interest earned from this account is tax-free in India. NRE account also features complete repatriation facility that allows the account holder to transfer the entire amount easily.

Some of the top features of an NRE account include:

• Currency: The funds are accessible in Indian currency
• Repatriability: Funds can be transferred to the country of residence without any hassle
• Tax Benefits: The interest earned on NRE account balance are tax-free
• Joint Account: In the case of joint NRE account, all the account holders need to be NRI

This account allows NRIs to manage any income they have earned in India. So, NRO accounts can be used to manage income earned in India from various sources such as rental income, dividend/interest income, investment returns, pension payout. NRO account lets you deposit both Indian Rupees and foreign currency. However, the interest earned from NRO account is taxable as per current tax rules. Here are some of the primary features and benefits of an NRO account:

• Local Income Management: The funds that are earned through sources in India can easily be managed in Indian currency.
• Easy Access to Funds: With such an account, NRIs visiting India can access their funds immediately to cover any local expenses.
• Multi-currency Support: NRO accounts in India allow deposit of both foreign currency and Indian currency which provides additional flexibility for management of finances.
• Repatriation: While repatriation of principal and interest is allowed in the case of NRO accounts, but only up to pre-determined limits.
• Joint Holding: NRO accounts can be held jointly by a NRI along with a resident Indian or NRI, which ensures simplified management of the account.

A FCNR account for NRI is primarily a fixed deposit (FD) account. This type of NRI account allows non-resident Indians to manage their deposits in foreign currency. This enables NRIs depositing foreign currency into their account to avoid currency fluctuations. Currently FCNR accounts in India allow deposits to be made in most leading foreign currencies, such as US$, British Pound, Euro, etc. Some key features of an FCNR account are as follows:

• Choice of Currency: NRIs have the option to choose from major foreign currencies. It allows them to safeguard their funds from foreign exchange fluctuations
• Full Repatriation: Account holders can transfer the entire account balance including principal and interest of a FCNR account without restriction
• Tax Benefits: The interest earned from FCNR accounts are not taxed in India
• Loan Facilities: NRIs may also borrow loan from a lending institution by pledging the balance of an FCNR account
• Renewability: While a FCNR account is opened for a specified term, it can be easily renewed by the NRI account holder post maturity

As you can see, each type of NRI account offers unique features and benefits which can meet the banking requirements of different group of non-resident Indian customers.

Know More About: NRI Investment options

• 1. Choose the Type of NRI Account
  • Based on your financial needs, decide whether you need an NRE, NRO, or FCNR account.
• 2. Select a Bank
  • Assess multiple options available and choose a reputed bank with operations in India that suits your needs best.
• 3. Fill Out the Application Form
  • Make sure you provide all the required details correctly in the application form.
• 4. Submit Required Documents
  • Typically, mandatory documents required would including copy of valid Indian passport, OCI card, proof of Overseas Address, etc. The bank may ask for additional documents that might be required on a case-by-case basis.
• 5. Complete KYC Process
  • The bank may require an in-person verification or attestation of documents by an Indian embassy, notary, or overseas bank before account activation.

After the account is opened, NRI accounts in India can typically be operated in online or offline mode.

Note: The above steps are illustrative only and additional steps may be needed as part of the bank’s internal policies.