Which NRI account is right for you: NRE, NRO, or FCNR? A simple guide.

An NRI (Non-Resident Indian) is a person who lives outside of India for more than 181 days. People who live outside India usually have different banking and investment needs because they earn and save money in different currencies from other countries. NRIs have three types of bank accounts to choose from in India: NRE, NRO, and FCNR. and these accounts can be opened at almost every major bank and financial organization in India. In this article, we will delve into the details of these accounts to help you understand their features, advantages, and disadvantages, making it easier for you to decide which one suits your needs best.

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NRO Account (Non – Resident Ordinary)
  • This account is for NRIs who have some form of income source in India. Example: Rental income from property, dividends, equity returns etc.
  • You can deposit funds in this account using either Indian or foreign currencies, but you can only withdraw them in INR.
  • One disadvantage is that TDS will be applied to the accrued interest in this account.
  • This account is available in various types, including savings, current, fixed deposit accounts etc.
  • You can repatriate up to $1 million from it each fiscal year.
  • Also, you can have a joint account with any of your family members in India and you can can also add nominee for your account.
  • You can avail a loan with this account in Indian currency.
Who should open this account:

This account is good if you plan to use your money only in India. Individuals who have attained NRI status should inform the bank and convert their savings account into an NRO account. Similarly, NRIs who plan to settle back in India should convert their NRO account into a regular savings account.

F&O Trading:
  • Participation in F&O requires an NRO saving bank account and a Custodial account, often with a minimum balance of 25 lakhs.
  • Profits earned are subject to a 30% tax imposed by the income tax department.
  • Also, profits made through this scheme cannot be repatriated.
NRE Account (Non – Resident External)
  • This account is for NRI’s income sources outside India.
  • So, the NRI can deposit their foreign currency earning into the NRE account, but it will be denominated in rupees.
  • Interest income is not taxable and the money in the account is fully repatriatable.
  • Similar to the NRO account, you can open a joint NRE account and also add a nominee to the account.
  • Rupee depreciation can pose a disadvantage because the account denominates the money in INR.
  • You can avail a loan with this account in Indian currency.
Who should open this account:

This account is good if you plan to use your money both in India and in the country where you make money. It is generally recommended to open a NRI account as soon as one attains NRI status.

Steps to Invest in the Indian Secondary Market


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  • NRIs can invest in shares or convertible debentures of Indian companies under repatriation through a registered stockbroker on a recognized Indian stock exchange using the Portfolio Investment Scheme (PIS) Account.
  • To participate in PIS, NRIs must open an NRE (Repatriation basis) account with one Designated Bank, following RBI guidelines. This designated bank account should exclusively handle PIS-related transactions, such as buying or selling shares, without any involvement in non-trading activities.
FCRN Account: (Foreign Currency Non-Resident)

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  • This account resembles a more advanced version of the NRE account.
  • It keeps your money in the currency in which you deposit it (USD, GBP, JPY, EURO, AUD, CAD etc. which are approved by RBI).
  •  Because the money is being held in those currencies, the risk of exchange rate fluctuations is eliminated.
  • However, this account only allows term deposits, which you can withdraw prematurely with a small penalty if needed.
  • You can avail a loan with this account in foreign currency, but with certain conditions.
Who should open this account:

This account is good if you make money in a different country and plan to use most of it outside India.

In general NRI accounts can be opened by:
  • NRIs, PIOs (Persons of Indian origin), and OCIs (Overseas Citizens of India) can open NRI bank accounts.
  • Individuals who are eligible under the India Citizen Act of 1955 due to their parents’ or grandparents’ Indian citizenship can also open such accounts.
  • Those officially deputed abroad by the Government of India or PSUs are eligible to open these accounts.
  • Individuals who have held an Indian passport at any point in time have the option to open such accounts.
  • Spouses of Indian citizens or PIOs (Persons of Indian Origin) have the privilege of opening these accounts.
  • Indian citizens settled abroad for work, studies, or business purposes have the opportunity to open NRI accounts.

To open know about NRI accounts and how to open them, mention your details below:


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