NRE vs NRO and FCNR Accounts: Know the Complete Differences
Non-Resident Indians (NRIs) often have very different banking and investment needs than those who live in India. This is because the majority of their earnings and assets are usually in international currencies. As a result, NRIs might need an account that can hold and convert their overseas earnings into Indian rupees. There are many NRI account options to choose from depending on their financial goals and needs. An NRI account can be opened at almost every major bank and financial organization in India, such as RBL Bank.
If you're an NRI looking to open a bank account in India, you have several options available to you. This article covers the three main types of NRI accounts - NRE, NRO, and FCNR - as well as their benefits and drawbacks. Read on to learn more about each account type and make the best choice for your needs.
NRI Bank Accounts Can Be Opened By:
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NRIs, PIOs (Persons of Indian origin), and OCIs (Overseas Citizens of India)
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Spouse of an Indian Citizen or spouse of PIO
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Indian citizens settled abroad for employment, studies, and business purpose
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Individuals officially deputed abroad by the Government of India or PSUs
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Individuals who held an Indian passport at any point in time
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Individuals whose parents or their grandparents were Citizens of India as per the India Citizen Act 1955
3 Major Types of NRI Accounts in India
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Non-Resident External (NRE) Savings Account & Fixed Deposit Account
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Non-Resident Ordinary (NRO) Savings Account & Fixed Deposit Account
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Foreign Currency Non-Resident (FCNR) Fixed Deposit Account
NRE accounts are used to deposit or save foreign earnings in Indian currency. NRO accounts are used to manage and save Indian earnings that are made in Indian currency. FCNR accounts can be used to deposit or save foreign currency earnings in any of the currencies that the RBI has approved. Let's get more into the specifics of each of them.
All about NRO Account
What?
If you have income in India, a Non-Resident Ordinary (NRO) account is a valuable savings account. You transfer Income earned in India including dividends, equity returns, pensions, rental income, and any other form of revenue. One may deposit funds in either Indian or foreign currencies into this account. However, only Indian rupees are used for withdrawals. NRO accounts can also be leveraged to invest in Indian securities, shares, mutual funds, etc. This rupee account comes in savings, current, fixed, and recurring deposit account variations.
Key Features:
- Manage your money earned in India from a variety of sources using the NRO account
- Foreign currency deposited in the NRO account is converted to Indian rupees at the applicable exchange rate
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You can also repatriate up to $1 million from it each fiscal year
All about NRE Account
What?
NRIs can deposit their foreign income in Indian rupees into this bank account. This account, which is denominated in rupees, can be used as a savings account, current account, fixed deposit account, or account for regular deposits. You can open an NRE account on your own or with a partner. However, only another NRI can open a joint account. Only income derived from abroad is eligible for NRE deposits. This account cannot accept deposits of earnings made in India.
Key Features:
- The account permits the transfer of foreign currency to India, allowing you to keep INR in your Indian bank account. The money you deposit in this account is fully repatriable
- The interest earned on the NRE Savings and Fixed Deposits is tax free
All about FCNR Account
What?
NRIs may deposit funds into this term in any of the currencies that the RBI accepts. Currently RBL Bank accepts deposits in eight different currencies: USD, GBP, AUD, SGD, CAD, CHF, EUR, and JPY. A term deposit account, not a savings account, is what an FCNR (B) account is. An NRI can deposit money in the currency of their choice using this method. While opening, money can also be transferred from an NRE account to an FCNR (B) account. The currency and tenure affect the interest rate on FCNR (B) accounts. NRIs can earn a fixed rate of interest on this account until maturity.
Key Features:
- As a holder of an FCNR account, you can maintain your deposits in different currencies
- The terms of these deposits can range from one year to five years
- The amount you deposit and the interest earned are fully refundable
- The FCNR account allows automatic renewal of deposits at maturity
- The FCNR deposits you maintain are not subject to Indian taxation
A Tabular Comparison
Choose the account that best fits your needs from the three available options. They all provide simple, effective ways for you to manage your income from various sources and allow you to move money between India and your resident country. The parameters of distinction between NRO, NRE, and FCNR accounts are shown in the table below.
PARAMETERS | NRE ACCOUNT | NRO ACCOUNT | FCNR ACCOUNT |
Who can open it? | NRIs/PIOs/OCIs (individuals/entities of Bangladesh/ Pakistan nationality/ ownership require prior approval of RBI) | Any person resident outside India (other than a person resident in Nepal and Bhutan). (Individuals/entities of Bangladesh/Pakistan nationality/ownership as well as erstwhile OCBs require prior approval of RBI) | NRIs/PIOs/OCIs (individuals/entities of Bangladesh/Pakistan Nationality/ownership require prior approval of RBI) |
Deposit | Foreign Currency | Indian Currency | USD, GBP, AUD, SGD, CAD, CHF, UR, JPY |
Withdrawals | Indian Rupee | Indian Rupee | Foreign Currency |
Taxation in India | Not taxable in India | Interest income is taxable | Not taxable in India |
Repatriability | Deposits and the interest earned are fully repatriable | Upto 1million USD per financial year | The deposits and the interest earned on them are fully repatriable |
Exchange Rate Risk | Foreign exchange risk due to currency fluctuations | No foreign exchange risk | No foreign exchange risk |
Joint Account | Can be held jointly with NRIs | Can be held jointly with NRIs | Can be held jointly with NRIs |
Account Types | Savings Account, Current Account, Term Deposits, Recurring deposit | Savings Account, Current Account, Term Deposits, Recurring deposit | Term Deposits |
Loan Against FD | Can avail in Indian Rupees | Can avail in Indian Rupees | Can avail in foreign currency with conditions |
What should you do to invest in Indian Secondary Market
Portfolio Investment Scheme (PIS) Account:
Portfolio Investment Scheme (PIS) Account allows NRIs to invest in shares/convertible debentures of Indian companies under repatriation through a registered stock broker on a recognized stock exchange in India.
The investor will have to open NRE account (Repatriation basis) account under PIS with only one Designated Bank.
As per RBI guidelines, NRIs should have a separate bank account exclusively for PIS purposes and all transactions relating to shares purchased or sold should be routed through this account and it should not be allowed to carry any other transaction which is not related to trading of shares.
RBL Bank NRI Accounts
You can open various NRI accounts with RBL Bank, including NRO accounts, NRE accounts, and FCNR accounts. Manage your foreign and domestic income profitably by opening the account type that best suits your requirements. Learn more about RBL Bank's most recent interest rates, fees, and advantages for opening different types of NRI accounts. Access all the paperwork and forms required for FCNR deposits.
Disclaimer: Articles published on the website are merely indicative and suggestive in nature and do not amount to solicitation. The contents do not guarantee the desired returns and/or results. Reader is advised to exercise discretion and consult independent advisors for achieving desired result. Visitors to this blog/ website w.r.t products & services offered by RBL Bank Limited herein, shall ensure that the comments / feedback posted shall be restricted to the contents published herein and shall not contain such language that may be un-parliamentary or against any religion, caste, section of society, political view etc. While our endeavor is to publish the comments that are submitted, however, all comments/feedback shall be subject to internal review by RBL Bank Limited. We do not guarantee that the comments that are submitted will be published.
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In the digital age when most banking activities are done online, it’s essential to be even more cautious. Here are some key tips for safe banking.
What is a Credit Score & why is it important?
A credit score is a three-digit number assigned by a Credit Information Companies (CIC) to a borrower based on his or her track record WRT earlier and…
Best ways to carry foreign currency while travelling abroad
We have outlined the best ways available to you to carry foreign currency for a travel abroad, whether for business or a vacation.
The rise of Credit Cards in India
In this blog, we explore how credit cards can help Indians optimize budgets while providing the freedom to spend wisely.
5 point checklist while going abroad
Following these small steps before your trip will help you maximize your enjoyment and minimize any worries!
Ways to keep your Credit Card safe while shopping online
With the onslaught of online shopping and transactions, your credit card could be vulnerable to hackers who have been getting smarter by the day.
Ways to Protect Yourself from Credit Card Frauds
In this blog, we’ll share simple steps to protect your credit card as fraud cases rise with increasing usage.
How to plan for a stress-free retirement
In this blog, we’ll explore how focused and careful planning can help you achieve a stress-free and enjoyable retirement.
How to inculcate a habit of saving in children
In this blog, we’ll discuss key ways to instill saving habits in children for better financial discipline in the future.
7 ways Mobile Banking spells convenience
Mobile banking enables financial transactions on smartphones or tablets. It's convenient, accessible, and eco-friendly.
Fostering women entrepreneurship in rural India through financial incl..
The empowerment of women is essential for achieving the objective of inclusive, equitable and sustainable development and economic growth in any nation.
How Mobile Banking is transforming traditional banking
Mobile banking's rise is driven by Digital India policies, better connectivity, and its inherent benefits.
Benefits of owning multiple credit cards
Multiple cards give you access to a large amount of credit. It helps you make the most of the interest-free period. When used wisely, having more than one…
Tips for buying Health Insurance
With rising healthcare costs and medical inflation, health insurance is essential. Consider these factors before purchasing a policy.
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