Any bonafide Indian citizen can open an account with any bank that has been verified by the Reserve Bank of India (RBI). However, non-residential Indians are not allowed to leverage such accounts. The process of opening a bank account for those who have maintained their Indian citizenship but reside in a foreign country is different.
There are several options and products to choose from when deciding your savings and investments as an NRI. With multiple available options, you can make sure that your money is invested through the right channel for generating good returns.
What is an NRI account?
NRI accounts are accounts opened in an Indian bank account by non-residential Indians and PIOs. The following individuals are eligible to open an NRI account:
Indian citizens residing in a foreign country for:
- Employment, education, business, or vacation
- Indian nationals posted in UN organizations or officially deputed abroad by the Government of India or Public Sector Undertakings.
- Indian nationals who may be marines or working on oil rigs of companies registered outside India.
Person of Indian Origin (PIO)
An individual holding a foreign passport:
- Possessed an Indian passport at any point in time
- Whose parent or grandparent was an Indian citizen based on the Indian Citizen Act 1955
- Is a partner in law to an Indian Citizen or spouse of PIO
Type of NRI accounts
NRIs are eligible to apply for a Non-Resident External account to deposit income earned in the country of their residence. The amount stored in an NRE account is in Indian rupees. NRIs have the flexibility to open both savings accounts and current accounts.
The main features of an NRE account are:
- An NRE account can be opened by both Non-Residential Indians (NRI) and Persons of Indian Origin (PIO).
- The amount stored is in the Indian denomination.
- Interest income earned is exempted from taxes in India.
- NRIs can credit funds through inward remittances from an overseas bank or transfer funds from another NRE account.
- There can be joint NRE account holders.
- Funds in an NRE account can freely be repatriated outside India.
A Non-Resident Ordinary account is a bank account opened by NRIs to store the income generated within India. It mandates the account holder to store any amount in Indian currency. However, any amount earned in their country of residence should go into an NRE account.
Main features of an NRO account:
- NRI, as well as PIO, can open an NRO account.
- The amount can be stored in Indian Rupees only.
- The interest earned in India is subject to a tax deduction.
- There can be joint NRO account holders.
- An Indian resident can operate the account through a power of attorney mode.
- The funds are entirely repatriable. However, the permitted limit is USD 1 million each financial year (subject to the submission of relevant documents).
An FCNR (Foreign Currency Non-Residential Account) account is primarily used for initiating fixed deposits. Both NRIs and PIOs can open FCNR accounts. It requires the income earned in a foreign country to be stored in an Indian bank. However, the account is denominated in the currency of their country of residence.
Main features of an FCNR account:
- Both NRI and PIO can open an FCNR account.
- The funds are stored in foreign currency.
- The interest accrued is not subject to a tax deduction.
- Funds accumulated in FCNR accounts are entirely repatriable.
Indians who are not residing in India can still invest in their country of origin with various NRI account options. Non-Residents Indians and Persons of Indian Origin can avail of several banking services based on their requirements. Leading private commercial banks, like RBL Bank, offer non-face-to-face account opening and KYC verification options to all NRIs and PIOs.