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NRE - NRO banking accounts

January 07, 2020

Are you a Non-Resident Indian? Do you find it difficult managing your earning abroad and back home in India? If your answer is a resounding yes to both the questions, this is a must-read for you.  This is where NRI Non-Resident Indian banking accounts come in to play. The Foreign Exchange Management Act states that an NRI should mandatorily convert their savings to a Non-Resident Rupee (NRE) account or a Non-Resident Ordinary Rupee (NRO) account.  This helps the Non-Resident Indian (NRI) to send the money they earn abroad to India and retain their income via assets from India.

What is a Non-Resident Rupee (NRE) account?

The NRE account helps the NRI to maintain a rupee-denominated account from the foreign country he is in. The foreign currency an NRI deposit is converted to the Indian rupee. An NRI can also transfer funds to a foreign account from an NRE account without any complications. The NRI can also use the International Debit card to transact. The NRE account is used,  primarily for carrying out business, personal banking and investing in India.

Federal Bank has various NRE options that you can check out here

What is a Non-Resident Ordinary Rupee (NRO) account

An NRO account helps an NRI manage their income earned in India. The NRI can deposit and manage their accumulated funds without any hassles. The NRI can also receive funds in Indian rupee or foreign currency in this account. This is a great option for NRIs who are in the habit of holding an account jointly with a person who is a resident in India. However, this account is liable to tax.

Federal Bank offers many options. Check them out here


What is the best option for you

While deciding on which account to open, there are three major things to take into account. The NRO accounts have limited access for repatriation, there is a sealing on the upper limit that you can invest while using an NRO account, however, NRE accounts offer free repatriations for both the principal and interest amount. The NRE account is tax-free in India while the interest earned in NRO account is subject to tax. An NRE account can only be opened using foreign currency, while NRO accounts can be opened with both foreign funds and Indian rupees. NRO account is more ideal if you want to keep your funds in the country. Additionally, for joint accounts, NRO accounts can be held with an Indian resident or with another NRI whereas NRE joint accounts can only be done with another NRI.

Federal Bank offers numerous options for the NRIs to maximise their earnings and savings in India. Read through our various offerings here and make an educated choice. We also are ready to clear all your doubts.