NRI bank accounts: Lose some, gain some

Non-Resident Indians (NRIs) have too many doubts on opening a bank account in India. In this article, we seek to provide with you all the information on the available accounts and their features.

Non-Resident External Account (NRE)

This account is useful for those persons who want to send money to India from any foreign country. There is no limit on the money to be transferred in this way. Individual NRI or two NRIs can open the account jointly. The foreign currency can be deposited and the Indian currency can be withdrawn. The interest earned does not come under Income-tax. Money can be transferred from this account to an NRI account. Entire principal and interest can be withdrawn if needed. When they come to India, the foreign currency can be deposited by the NRIs in this account. It is converted into Indian currency automatically. But, one disadvantage here is that the NRI may lose some in the conversion rates.

Non-Resident Ordinary Rupee Account (NRO)

This account can be opened individually or by joining with any person in India. For example, one Infosys employee Subrahmanyam got a job offer in a reputed company in USA. He boarded a plane within two days. He has a bank account at Madhapur branch of SBI. From now onwards, the account will be considered as an NRI account.

This account is useful for those persons who have some sources of income in India like house rents, interest, pension etc. The income from these sources can be deposited in this account. This is because, there is no possibility of depositing Indian currency in NRE account. The interest earned from these deposits will come under Income-tax. The deposits can be made both in foreign and Indian currencies and the withdrawal must be in Indian currency only. One can't transfer money from this account to NRE account. Further, the rules are such that one can't transfer entire money or interest from this account to any foreign country and the maximum limit is ten lakh dollars only in a year.

Huge penalty if account is not transferred

Both NRE and NRO accounts can be opened in the form of savings, current, recurring deposits and fixed deposits accounts. Minimum balance has to be maintained in these accounts. Residing in any foreign country and continuing any bank account in India as a citizen of India is a crime. So, any person has to convert his account into NRE account once he goes to any foreign country for employment or for settling down there permanently. It would be a nice thing to close down the bank account in India. Otherwise huge penalties will be imposed. These rules are applicable when any person stayed in any foreign country for more than 180 days.

Foreign Currency Non-Resident Bank account FCNRB

Through this account, non-resident Indians and persons of Indian origin can make deposits in foreign currency and earn interest. Money can be transferred from a bank account in any foreign country to FCNRB in India. Further, foreign currency can be deposited when they come to India. You have the facility of transferring money from FCNRB. You can open the account with a term ranging from one year to five years. Entire deposit can be taken back in foreign currency. The account allows you to make deposits in foreign currency only so as to prevent loss with the frequent changes in currency conversion rates. The latest guidelines of the Reserve Bank of India and all other doubts on the matter can be clarified by visiting the following links.

https://rbidocs.rbi.org.in/rdocs/Notification/PDFs/02MC010712FL.pdf

https://www.rbi.org.in/Scripts/BS_ViewMasCirculardetails.aspx?id=8999

https://www.rbi.org.in/scripts/FAQView.aspx?Id=52