NRI Banking

Banking

NRIs (Non-Resident Indians) have three main account types in India: NRE (Non-Resident External), NRO (Non-Resident Ordinary), and FCNR (Foreign Currency Non-Resident). Each serves different purposes for managing Indian income and foreign earnings.

In detail

NRI account comparison:nNRE account: holds foreign earnings converted to INR. Fully repatriable (can send money back abroad). Interest tax-free in India. Balances fluctuate with USD/INR rate.nNRO account: holds Indian income (rent, dividends, salary before moving abroad). Can remit up to USD 1M/year after tax. Interest taxable at 30% TDS.nFCNR (B) account: holds foreign currency (USD, GBP, EUR, etc.). No exchange rate risk. Fixed deposit only. Fully repatriable. Interest tax-free.nnFor NRI investing in India: demat account (NRI-Compliant), PIS (Portfolio Investment Scheme) account for equity investment. Mutual funds via NRE/NRO accounts.

Real-life example

🇮🇳 India example

Raj in the USA earns USD 100K/year. He maintains: NRE savings (USD earnings remitted to India for living expenses when visiting). NRO FD (rental income from his Bengaluru property deposited here, 30% TDS deducted). FCNR deposit (USD 50,000 in 3-year FCNR -- earning USD interest with no INR exchange risk). This three-account structure optimises his India-USA financial relationship.

Frequently asked questions

Do NRIs have to pay tax in India on NRE account interest? ▼

NRE account interest is completely tax-exempt in India as long as the account holder maintains NRI status. When you return to India and become a resident, NRE accounts need to be redesignated to resident accounts and interest becomes taxable. FEMA rules require account type change within reasonable time of becoming a resident.