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Common myths about NRI accounts

January 07, 2020

It is common knowledge that an NRI can send money back to their families in India - however, when it comes to NRIs holding accounts in Indian banks, there are a lot of misconceptions. We try to address 5 major misconceptions here. 

Myth 1: All NRI bank accounts are the same

There are mainly two popular accounts that an NRI can open, they are the NRE account and the NRO account. The NRO account is an Indian Rupee account and they have to pay taxes on interest earned on this account. An NRE account can be opened in a foreign currency and it is maintained in Indian Rupee. FCNR or the Foreign Currency Non-Repatriate account forms the third one.


Myth 2: NRI has to visit India to get a loan

If all the paperwork is in order, an NRI can apply and open a loan with a bank in India with just a couple of keystrokes on the computer. It is as simple as that. 

From home loans to vehicle loans and gold loans, Federal Bank offers an NRI a very friendly, hassle-free process to apply for loans. Check them out here. <https://www.federalbank.co.in/nri-banking>


Myth 3: NRI cannot invest in Stocks 

An NRI can invest in direct equity. The only pre-requisite is that he should have an NRE or NRO account that has been linked to a Demat account with any bank or registered stockbroker in India. As per the Portfolio Investment Scheme (PIS) of Reserve Bank of India, NRIs can purchase and sell shares and convertible debentures of Indian Companies on a recognized stock exchange by routing such purchase/sale transactions through their designated accounts. The investments into stocks by NRIs should be routed through PIS route. You can read more about Portfolio Investment scheme.


Myth 4: Higher interest rates for loans to NRI

No. The rates provided for the NRIs are at par with their Indian counterparts. At Federal Bank, we follow a very transparent process. Depending on the type of loan and the amount our calculator gives you a general overview of the rates provided by Federal Bank. Check it out here <https://www.federalbank.co.in/nri-banking>


Myth 5: PIO cannot invest in real estate in India

A Person of Indian Origin (PIO) can invest in real estate in India once they provide the necessary paperwork. They can also avail of loans for the same process from different banks. 


Check out the Federal Bank NRI section for more investment options in India.