As per the RBI (Reserve Bank of India) Regulations, an NRI (Non-Resident Indian) can open three types of bank accounts in India – NRE (Non Resident External) account, NRO (Non Resident Ordinary) account and FCNR (Foreign Currency Non Resident) account. All these three types of accounts carry their respective benefits and restrictions and are suitable for different types of transactions for the NRIs.
Of the above, NRO accounts are the most flexible in allowing the transactions from the account and managing the account through joint operations. Such accounts can receive credits in foreign currencies and Indian rupees, and thus, are best suited for the NRIs who need to receive funds from within India as well. Such domestic sources of credits may be a redemption of investments, dividend income from Indian companies, rental income from India, sale of assets within India, etc. However, while such accounts are flexible in terms of receiving credits, such accounts are restrictive regarding the repatriability of funds. One can transfer the funds abroad from their NRO accounts only subject to specified limits for the principal amount, while the interest income is freely repatriable.
On the other hand, NRE accounts can receive only foreign currency remittances from outside India, and no rupee credits are allowed in such accounts. With an NRE account, you get the provision of free repatriability of funds outside India for the account holders apart from the tax benefits on interest income, etc. Like NRE accounts, FCNR (B) deposits can also be held by the NRIs, wherein the amount so deposited continues to be denominated in foreign currency, and such deposits, including the interest income, are freely repatriable, i.e., transferable outside India without any limits. Like NRE accounts, interest income on FCNR(B) deposits is exempt from tax.
The process of nre account opening online is as below:
- Visit the official website of the bank that offers NRI Banking Services.
- Select the type of NRI account required to be opened through the portal. The portal further requires you to upload KYC (Know Your Customer) documents. Such documents may include attested passport copies, proof for NRI status, proof for residential address abroad, copy of VISA, FATCA (Foreign Account Tax Compliance Act) declaration as may be applicable, PAN (Permanent Account Number) etc.
- Post the submission of KYC documents on the portal; you can opt for a callback from a bank official, which can further help with pending requirements if any.
- The funding process succeeds submission of documents. As per the account features specified above for the different types of accounts, NRI accounts must be funded as per their respective eligibility to receive rupee and foreign currency credits. One can transfer the funds from an NRO account or any other regular bank account to fund an NRO account. Similarly, the NRE account can only be funded through inward remittances from overseas or transfer from another NRE/ FCNR account. For funding an FCNR(B) deposit, the funds can be transferred from an NRE account or through an inward overseas remittance.
- One can also open NRI accounts in a joint name. However, the eligibility criteria for the joint holder varies for different NRI accounts. While one can only have another NRI as a joint holder in NRE and FCNR accounts, any resident Indian or Non-Resident Indian can be a joint holder in NRO accounts. Similarly, before completing nre account opening online, one can also add a nominee to the account.
The account opening process for Non-Resident Indians (NRI) is convenient and straightforward, and one can also open an NRI bank account in India while being away.
The information provided in this article is for informational purposes only. You may consider consulting tax professionals for specific guidance for the applicable Income Tax rules, as tax benefits are subject to changes due to change in tax laws.