A Non-Resident Indian, or NRI, with earnings both in India and abroad may find it difficult to manage their finances, especially as they have to take two different currencies into consideration. Repatriation of money and fund transfers from one currency to another are some of the complications that may come their way. That is why NRE and NRO accounts are quite important for NRIs who have sources of earning in India, want to send their savings to India, or plan to invest here.
The Need for NRI Accounts
As per Foreign Exchange Management Act (FEMA) guidelines, a non-resident Indian is not allowed to have a resident savings account in their name in India. All savings or money earned or sent from abroad must be deposited in a Non-Resident External Account (NRE) /FCNR Ac Even if an NRI has earnings in India, they must use NRO account for any transactions or deposits. Continuing to use a regular savings account in the home country attracts hefty penalties. That is why it is important for an NRI to open an NRO or NRE, or both, accounts online as soon as possible. These accounts also allow NRIs to send their foreign earnings to India at any time, as well as to retain their earnings in India (via assets and investments) within the country itself.
Tips for Opening NRE or NRO Accounts Online
The availability of online banking and financial services has made it easier for overseas customers to open accounts online, check their account balance, and do much more. However, there are a few things you should keep in mind when opening an NRE or NRO account:
- Don’t Procrastinate in Opening an NRI account
Moving to a new country involves a lot of time and effort, and in the hustle and bustle, it is quite common for people to forget about bank accounts. But as soon as one receives an NRI status, it becomes illegal for them to hold a regular resident bank account in India. One of the biggest mistakes an NRI can make is to continue using their regular bank account even after becoming an NRI as that can attract some hefty penalties. So, whether you have recently gained NRI status, or are planning to, make sure you open an NRE or NRO account well in time.
- Do Your Research Well
One of the best advantages of opening an account online is that you have ample time and convenience to research the various offerings of different financial institutions. Apart from comparing the different features, benefits, and interest rates, you also need to decide which account would be most suited for your needs. It is important to understand the differences between NRE and NRO accounts, so you can make the right decision based on your financial portfolio, sources of earning, investment goals, etc. To help you get started, here is more on what each account has to offer:
- Non-Resident External (NRE) Accounts: The Non-Resident External (NRE) account is an Indian rupee-denominated account. An NRE account can be a savings, current, recurring deposit, or fixed deposit account. Deposits can only be made in foreign currency in an NRE account, which is converted into rupees (INR). The account allows for the hassle-free transfer of funds, both principal and interest amounts, to foreign accounts as well. When you open an NRE account online, an important thing to remember is that the money that you deposit in these accounts should have been earned outside your home country. Linking the NRE account number to investment accounts makes it easier to access investment instruments like mutual funds for NRIs. To withdraw money from the NRE account, international debit cards are issued, using which transactions can be made 24×7.
- Non-Resident Ordinary (NRO) Account: The Non-Resident Ordinary (NRO) account can also be opened as a savings, current, recurring deposit, or fixed deposit account in India by non-resident Indians (NRIs) to manage their income and savings earned in India. You can open an NRO accountonline and deposit funds in the Indian rupee as well as in foreign currencies( the same is converted to INR. In addition to this, an NRO account can be a joint account as well, opened with an Indian resident or with a fellow NRI.
- Check What is Offered
Before you open an NRE or NRO account online, you should check out the interest rates being offered by different banks. Apart from that, look at their features, the services they offer, facilities, their reputation in the market, reviews from other NRIs, etc. to choose a bank or financial institution that will be most beneficial for you.
- Keep KYC Documents and NRI Status Proof Handy
Another tip that will make your experience smooth is keeping all the necessary documents handy before you fill the application form. While opening an account online, you will be required to upload everything in digital form, so make sure you have scanned copies of all required documents saved on your laptop or desktop. Some of the most commonly asked for documents include basic KYC documents and an NRI status proof including:
- Copy of your current passport
- Proof of overseas residence
- Proof of Indian residence
- Copy of your visa
- Indian PAN Card and/or Form 60
- Passport sized coloured photograph (scanned in colour and saved in JPEG or PNG format)
In addition to this, some banks may ask for an initial payment via cheque or draft from your account, which may be equivalent to the amount required to maintain the minimum monthly /quarterly balance in the NRE or NRO account. For a more comprehensive list of documents required, you can check the official website of the bank or financial institution you have chosen to open an NRE or NRO account at.
- Check the Minimum Monthly/quarterly Balance Requirements
Most bank accounts have a minimum balance requirement and if your account goes below that amount, penalties may be deducted. This minimum amount varies from bank to bank, so it is always a good idea to check what minimum balance requirement a bank has before you open your NRE or NRO account there. Choose a bank that has a balance requirement that is easily affordable for you.
With these tips, it should be extremely easy for you to open an NRE or NRO account online and manage your financials with ease.
