Money Matters: Know What Are The Different Types Of NRI Accounts

As the world becomes increasingly interconnected, more and more Indians are choosing to live and work abroad. This has led to a significant rise in the number of Non-Resident Indians (NRIs) who require banking services that cater to their specific money needs. NRI accounts are designed to meet the financial requirements of NRIs living and working abroad. In this article, we will discuss the different types of NRI accounts available in India.

Whether you're sending money home to loved ones, investing for the future, or just saving it, there's an NRI account for everyone. These accounts offer various benefits and features to NRIs, making it easier for them to manage their finances in India.

What Is An NRI Account?

An NRI account is an account set up by a Person of Indian Origin (PIO) or Non-Resident Indian (NRI) with a bank or financial institution that has been granted permission by the Reserve Bank of India (RBI) to offer a range of services.

Types Of NRI Accounts:

Here are the different types of NRI accounts:

1. NRE (Non-Resident External) Account

It enables NRIs to keep their foreign income in Indian rupees, which they can easily transfer to other currencies if needed. Both the interest earned and its full return are tax-free. Many possibilities are available with this type of account, including the option to open the account as a current account, savings account, or fixed deposit.

When money is kept in these kinds of accounts, no tax is imposed on the interest that is earned. These can be opened in the name of a resident or a relative who is an Indian citizen and permit the repatriation of funds.

2. NRO (Non-Resident Ordinary) Account

An NRO account, like an NRE account, enables the account holder to keep whatever amount of Indian cash. It differs from an NRE account, though, in that it can only be used to keep income that is earned within India. Stated differently, this account will not accept any funds generated from their nation.

It is an account that can help you handle your income, both domestically and internationally. One advantage is that income generated both inside and outside of India can be deposited. They are also less likely to affect changes in exchange rates.

Don't miss:Money Matters: 5 Things NRIs Should Keep In Mind While Investing In Real Estate In India

3. FCNR (Foreign Currency Non-Resident) Account

Only NRIs with an NRE or NRO account are eligible for an FCNR account, which is seen as a smart choice since it attracts international remittances. Indian citizens who are not residents can deposit money in foreign currencies using a Foreign Currency Non-Resident (FCRN) account. You can deposit the money from the nation in which they are employed and reside. In this account the intеrеst еarnеd is tax-frее. (Where Can NRIs Invest In India?)

Fixed-term deposit accounts, or FCNR accounts, have a one-year minimum and a five-year maximum duration. This enables you to earn interest while keeping money for a certain period.

Don't miss:Money Matters: 6 Smart Investment Choices For NRIs In India

Each type of NRI account has its advantages and disadvantages, so it is important to choose the right one for your needs. Here are some things to consider when choosing an NRI account:

i) Your source of income: If you earn your income outside of India, you should open an NRE account. If you have income or assets in India, you should open an NRO account.

ii) Your tax residency: If you are not a tax resident of India, you should open an NRE or FCNR account. If you are a tax resident of India, you can open any type of account.

iii) Your currency needs: If you need to save your money in a foreign currency, you should open an FCNR account.

For more such stories, stay tuned to HerZindagi.