Types of NRI Accounts

Types of NRI Accounts

About

• A Non-Resident Indian (NRI) account can be opened by an NRI with any authorized bank in India.

• In India, there are three types of NRI accounts: 
  • Non-Resident Ordinary (NRO) Account 
  • Non-Resident External (NRE) Account 
  • Foreign Currency Non-Resident (Bank) Account.

Non-Resident Ordinary (NRO) Account

• A Non-Resident Ordinary account is one of the types of NRI account, which is useful for managing the income that an NRI is still earning in India. The income can be in the form of interest, dividend, rent, etc.  
• An NRO account facilitates the money transfer abroad. In this account, one can deposit money in Indian or foreign currency. However, the withdrawals happen only in Indian currency.  
• This rupee-denominated account can be in the form of savings account, current account, fixed deposit account, and recurring deposit account.  
• Interest earned from an NRO Account is subject to tax in India.  
• The NRIs can repatriate the funds in this account but with certain limits.

Non-Resident External (NRE) Account

• A Non-Resident External Account is a bank account for NRIs to deposit their earnings from abroad in Indian rupee. This rupee-denominated account can be a savings account, current account, fixed deposit account and recurring deposit account.  
• The withdrawals happen in the resident country currency of the NRI. Hence this account is subject to exchange rate fluctuations.  
• Interest earned from NRE Accounts is tax-exempt in India. 
• Funds in NRE Accounts, including principal and interest, are fully repatriable, allowing account holders to transfer money back to their country of residence without any restrictions.

Foreign Currency Non-Resident (Bank) or FCNR(B) Account

• FCNR(B) deposits are fixed-term bank deposits that can be opened in India by NRIs, Overseas Citizens of India (OCIs), and Persons of Indian Origin (PIOs).  
• These deposits allow overseas Indians to maintain their savings in designated foreign currencies such as the US dollar, pound sterling, euro, Japanese yen, Australian dollar, and Canadian dollar, rather than converting their funds into Indian rupees. 
• The deposit and interest amount in this account are fully repatriable. Since the deposits and withdrawals made in this account are in foreign currency, the funds in this account are free from any exchange rate fluctuations. 
• Interest earned on FCNR(B) deposits is exempt from income tax in India as long as the depositor qualifies as a non-resident under Indian tax laws.