A non-resident Indian (NRI) is an Indian citizen or a person of Indian origin residing outside India. A resident is a citizen who stays in India for at least 182 days in a financial year. NRIs can maintain bank accounts in India in the form of rupee or foreign currency accounts. The latter can be maintained only with RBI authorised dealers or banks.
Non-Resident External or NRE account is a rupee account opened by NRIs to facilitate the transfer of funds to India. Funds which are generated overseas in any other currency are transferred to India in Rupees and held in NRE accounts.
An NRI (Non-Resident Indian) with earnings both abroad and in India often faces difficulties in managing his/her finances. They also find it challenging to track bank accounts in a different country, and even when trying to repatriate money to their home account. NRE & NRO accounts help with this.
Types of accounts
NRIs can maintain the following types of accounts:
- Non Resident (External) Rupee Account (NRE account)
- Non Resident (Ordinary) Rupee Account (NRO account)
- Foreign Currency (Non Resident) Account (FCNR account)
Features of NRE Regular Savings Account
- Low Average Quarterly Balance of Rs 10,000 ( A& B Category Branches)/ Rs 5000 ( C& Rural Category)
- International Debit Card allows access to your bank account anytime, anywhere both in India and Abroad
- Free Payable at par cheque book for use in India.
- Access to Best-in-class Digital Banking – Net Banking, Mobile Banking and Video Branch
- Host of Online and Telegraphic options to transfer funds to India
- Earn attractive interest rate of up to 6% on your savings
- Funds are fully and freely repatriable (both principal and Interest)
- Interest Earned is exempt from tax in India
- The funds are maintained in Indian Rupees
What is the benefit of NRI account?
Key NRI account benefits are:
- The facility to deposit and manage your income that you have earned abroad as well as in India.
- Funds transfer for free at attractive exchange rates (for NRE account)
- No need of maintaining high balance in NRE and NRO accounts.
Savings Account Eligibility Criteria
Eligibility Criteria
- NRIs and PIOs.
- Seafarers of Indian nationality / origin employed by overseas shipping companies
- Students pursuing studies in foreign countries.
What is a Non-Resident Rupee (NRE) Account?
The NRE account is an Indian rupee-denominated account, offering complete security. These accounts can be in the form of savings, current, recurring, or fixed deposits. The foreign currency you deposit into the account is converted to INR. You can transfer your funds (Principal & Interest amount) to a foreign account from an NRE account without any complications and restrictions.
You need to note that the amount you deposit into these accounts must be earned outside India. The international debit card enables you to transact and withdraw money 24*7. Also, mutual fund investments to become effortless and instant if you link your NRE account number to the investment account. NRE account is primarily used for carrying out business, personal banking and making investments in India.
How many NRE Accounts can be opened?
The Reserve Bank of India (RBI) has authorised that a non-resident Indian (NRI) can open three types of accounts in India. So, you can choose any best bank for NRE account for up to three accounts.
How is an NRE Account different from NRO Account?
Repatriation
NRO accounts have limited access for repatriation. An NRO account restricts you from remitting more than USD 1 million inclusive of taxes during an assessment year. You can repatriate the interest amount freely, but the principal amount can be repatriated only within set limits. It also requires an undertaking along with a certificate from a Chartered Accountant. However, repatriation is free for NRE account holders for both the principal and the interest amount.
Tax Treatment
An NRE account is tax-free (no income tax, wealth tax, or gift tax) in India. On the other hand, the interest earned in NRO accounts and credit balances is subject to respective income tax bracket. They are also subject to applicable wealth and gift tax. You can avail the reduced tax benefit under the Double Taxation Avoidance Agreement (DTAA).
Joint Account Holding
You can have a joint NRE account only if both the parties are NRIs. On the other hand, you can open an NRO account with another NRI or a resident Indian (a close relative) as mentioned under Section 6 of the Companies Act 1956.
Top 10 Banks Saving Accounts for NRIs in 2021
Some of the best banks for NRI saving account are Axis Bank, ICICI, HDFC, Kotak Mahindra, Bank of Baroda, Deutsche Bank, and the State Bank of India (SBI). They offer attractive rates and best services. Different banks offer different features like interest rates, maintenance facilities, ease of account opening, remittances and other so on, that differentiates them.
| Bank Name | Interest rate (%) Per Annum |
| SBI Bank | 2.70% |
| Bank of Baroda | 2.75% |
| Citibank | 2.75% to 3.75% |
| ICICI Bank | 3% to 3.50% |
| HDFC Bank | 3% to 3.50% |
| Axis Bank | 3% to Repo + (-0.65%) |
| Kotak Mahindra Bank | 3.50% |
| Yes Bank | 4% to 6% |
| RBL Bank | 4.75% to 6.75% |
Points to note
When a resident Indian becomes an NRI, he/she needs to inform the bank to convert the existing savings bank account to NRO account.
An NRI returning to India can open Resident Foreign Currency to hold balances that he/she held in NRE or FCNR accounts.