NRI Accounts: Three Types That You Can Open

Non-resident Indians or NRIs do Remittances in millions to India every year. This is usually sent to build savings, for investments, to provide financial support to their loved ones, to build a corpus, to buy a home, for retirement, etc. Hence, most banks and financial institutions offer numerous banking products and services to attract such customers. One such product is an NRI Account.

What is it?

For you to be declared an NRI, you should stay outside India for a minimum of 120 days in a year. You should also spend less than 365 days in India in four previous years. Banks offer such people the opportunity to maintain a Savings Account where they can store their savings in Indian Rupees and other foreign currencies. Such an account is called an NRI Account. There are different NRI Accounts and some of the major ones include the:

• Non-Resident External Savings or Fixed Deposit Account
• Non-Resident Ordinary Savings or Fixed Deposit Account
• Foreign Currency Non-Resident Deposit Account

NRE Savings Account

An NRE Account is maintained in Indian Rupee or INR. So, when you deposit money in such an account, the foreign currency gets converted to INR at the current foreign exchange rates. The principal amount that you save and the interest that you earn are completely repatriable or transferable. The interest income from this account is also non-taxable in India.

This account is mainly used by NRIs to transfer excess funds from the income that they earn abroad to be stored as savings. You open this account jointly with another NRI.

NRO Savings Account

This Savings Bank Account is maintained in INR. Hence, any funds deposited in your NRO Account in a foreign currency get converted to INR at the present foreign exchange rate. This account can be used to save funds from the income you earn in India and abroad. Any income like dividends, pensions, rent, etc., can be sent abroad using this account.

The interest that you earn on the funds saved here is liable for Tax Deductible at Source. Moreover, you can open an NRO Account jointly with a Resident Indian or another NRI.

FCNR Account

When you open NRI Account online from the country you reside in, you can also choose the option of opening an FCNR Account. Such an account can be maintained only in foreign currency. Moreover, this is not a Savings Account. Instead, they are Term Deposits. The principal amount you save and the interest income that you receive from this account are fully transferable or repatriable. Moreover, the interest that you earn on the principal amount cannot be taxed in India.

Shashank Bhaskar is an Mba student and financial advisor in Mumbai.he shares his financial experience and guides you about all your financial queries.