NRI Account Types and Benefits
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A Non-Resident Indian or NRI is an individual who has been residing in a foreign country for more than 120 days in a year. Also, an individual who lives in a different country for employment purposes is an NRI. However, there are some NRIs who want to have their bank accounts in India. How do they do it? Well, they can open an NRI account. Let us read on to know it!
What is an NRI Account?
The bank accounts that are opened by an NRI or a Person of Indian Origin (PIO) are called NRI accounts. An NRI account in India has to be opened with a bank that is authorized by the Reserve Bank of India. Other than banks, these accounts can also be opened with other financial institutions. The money deposited by the NRIs in these accounts can either originate from India or any other country. Along with financial services, many banks and institutions also offer additional benefits such as health insurance and life insurance plans tailored for NRIs, helping them secure both their finances and well-being while staying connected to India.
Eligibility Criteria for Opening an NRI Account
To open an NRI account, one has to follow some eligibility criteria, which include the below-mentioned:
- The individual must be employed or owns a business in a foreign country
- Government employees who have diplomat passports
- Students who pursue education in foreign countries
- A serviceman employed with the Indian Navy, airlines that are registered with a foreign country, foreign shipping companies, oil rigs, etc.
Documents needed for Opening an NRI Account
If an NRI wants to open an account in a bank or any financial institution in India, he/she has to submit certain documents. The NRI account opening documents include:
- An application form
- Proof of employment
- Photocopies of passport, each page
- Visa permit, work permit, student permit, Residence Visa, or Employment Visa
- KYC documents.
The documents may vary as per the financial institution.
Benefits of Opening an NRI Account in India
As the advantages of opening an NRI account in India are concerned, here are some of them mentioned below:
1. A good investment plan for NRI
NRIs who are staying away from India but want to make their investment portfolio more diverse can invest in an NRI account. An NRI account helps buy or sell stocks, mutual funds, and other assets.
2. The minimum balance is low
In an NRI account, the minimum balance that has to be maintained is quite low, which is INR 10,000. Therefore, one does not have to be bothered about maintaining a high balance in the account.
3. More than one currency is deposited
One of the benefits of an NRI account is that the NRIs can deposit funds in this type of account and the currency can be of the country in which they are residing. This can be done through FCNR deposits.
4. Tax benefits
NRIs who open an NRE or FCNR account get to earn extra income in the form of interest. And this additional income is totally tax-free. However, the interest earned from NRO accounts is taxable.
Types of NRI Accounts
There are several types of NRI accounts. Some of them include:
- Non-Resident Ordinary (NRO) Savings Account/ Fixed Deposit Account
- Non-Resident External (NRE) Savings Account/ Fixed Deposit Account
- Foreign Currency Non-Resident (FCNR) Fixed Deposit Account
| Basis of Difference | NRE | NRO | FCNR |
| Purpose | NRE account is for depositing income in India which has been earned in any other country | NRO Account is for depositing income that an individual earns in India | FCNR account is for depositing earnings in foreign currency in an Indian account |
| Deposit Currency | Foreign Currency | Indian Rupee | USD, GBP, AUD, SGD, CAD, CHF, HKD, EUR, JPY |
| Withdrawal Currency | Indian Rupee | Indian Rupee | Foreign Currency |
| Taxation in India | Not taxable in India | 30% tax rate applicable | Not taxable in India |
| Exchange Rate Risk | NRE account has foreign exchange risk due to currency fluctuations | No foreign exchange risk | No foreign exchange risk |
| Repairability | The deposits and the interest earned on them are completely repatriable | Deposits made in this account are repatriable to the NRI’s country of residence with some limits | The deposits and the interest earned on them are completely repatriable |
| Joint Account with NRI | Permitted | Allowed | Permitted |
| Joint Account with Indian Resident | Not Permitted | Permitted | Not Permitted |
| Types of Accounts | Current Account, Savings Account, Recurring and Fixed Deposits | Current Account, Savings Account, Recurring and Fixed Deposits | Term deposits only |
| Loan against deposit | The loan is given in Indian Rupees. | Available, in Indian rupees | Available, in foreign currency, however with certain restrictions |
Banks offering NRI Accounts
There are quite many banks in India that offer NRI accounts. Here are some of them mentioned below:
- Axis Bank
- SBI Bank
- Kotak Mahindra Bank
- ICICI Bank
- HDFC Bank
- Standard Chartered
- Deutsche Bank
- Bank of Baroda
- Citi Bank
- RBL Bank
- YES Bank
Now, all that you need to do is to choose the right financial institution in which you can open an NRI account. And while you try to open an NRI account, you must ensure of checking the terms and conditions first.
Author Bio
Paybima Team
Paybima is an Indian insurance aggregator on a mission to make insurance simple for people. Paybima is the Digital arm of the already established and trusted Mahindra Insurance Brokers Ltd., a reputed name in the insurance broking industry with 21 years of experience. Paybima promises you the easy-to-access online platform to buy insurance policies, and also extend their unrelented assistance with all your policy related queries and services.
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