NRE Blog

Managing money across two countries is rarely straightforward. As an NRI, your income often comes from multiple sources like a salary earned abroad, rent from a property in India, or perhaps both. According to the Indian banking rules you are required to hold these earnings in the right type of account. Choosing the wrong one can mean unnecessary tax outgo, repatriation hurdles, or simply an account that doesn't fit how you manage your money.

RBL Bank, like most major banks in India, offers NRI account options designed to address exactly this. This article covers the three main types of NRI accounts viz., NRE, NRO, and FCNR(B), along with their benefits and limitations, so you can choose the one (or combination) that best matches your financial situation.

Who Can Open an NRI Bank Account in India?

Individuals who meet any of the following criteria are eligible to open NRI bank accounts in India:

NRIs and OCIs (Overseas Citizens of India) which include:

• Indian citizens settled abroad for employment, studies, business, or other legitimate purposes for uncertain period of time
• Spouses of an NRI accompanying them on a dependent visa, or spouses of a OCI
• Indian citizens working on international vessels, in the merchant navy, on cruise lines, or on oil rigs
• Indian citizens officially deputed abroad by the Government of India or PSUs
• Individuals who have held an Indian passport at any point
• Individuals whose parents or grandparents were citizens of India under the Citizenship Act, 1955

Note: Short trip for business meetings, tourism, or health care does not provide NRI status.

NRE vs NRO vs FCNR(B): Understanding the Three Account Types

The difference between NRE, NRO, and FCNR(B) accounts comes down to three factors — the source of the income, repatriation rules, and the currency in which the funds are held. Understanding these distinctions helps you choose the right account for your specific needs:

• Non-Resident External (NRE) Savings Account & Fixed Deposits is meant for depositing or saving foreign earnings in Indian rupees; suitable if you need a dedicated account in India for income earned overseas
• Non-Resident Ordinary (NRO) Savings Account & Fixed Deposits are used to manage and save income earned within India, held in Indian rupees, since NRIs cannot maintain a regular resident savings account for such funds
• Foreign Currency Non-Resident FCNR(B) Deposits is used to deposit or save foreign currency earnings in any of the currencies approved by the RBI

Understanding the NRE Account

An NRE account allows NRIs to deposit their foreign income into India, converted into Indian rupees. This is the key distinction from an NRO account. An NRE account is built specifically for foreign earnings, not income generated within India. This rupee-denominated account is available as a savings account, current account, or fixed deposit, and can be held individually or jointly with another NRI. Only income earned abroad or transfer from other NRE/FCNR account are eligible for deposit into an NRE account, making it unsuitable for managing earnings made within India.

Key Features

• Allows the transfer of foreign currency into India, held as INR in your Indian bank account, with both principal and interest fully repatriable
• Interest earned on NRE savings and fixed deposits is exempt from taxes in India

Understanding the NRO Account

If you have income arising in India, an NRO account is the appropriate choice for managing it. An NRO account is used to handle income earned in India, including dividends, equity returns, pension, rental income, and other domestic revenue. Funds can be deposited in either Indian or foreign currency (converted to INR), though withdrawals are made only in Indian rupees, subject to rules based on your country of residence. NRO accounts can also be used to invest in Indian securities, shares, and mutual funds. This rupee-denominated account is available in savings, current, fixed deposit, and recurring deposit variants.

Key Features

• Designed to manage income earned in India from multiple sources, allowing you to handle local income efficiently
• Interest earned on NRO account & Fixed deposit are subject to taxes
• Foreign currency deposited into an NRO account is converted to INR at the applicable exchange rate
• Funds can be repatriated each financial year, subject to a limit of up to USD 1 million and payment of taxes

Understanding the Foreign Currency Non-Resident FCNR(B) Account

An FCNR(B) account is a term deposit account, distinct from a savings account. NRIs can deposit funds into this term deposit in foreign currency, across any of the currencies accepted by the RBI. RBL Bank currently accepts deposits in eight currencies: USD, GBP, AUD, SGD, CAD, CHF, EUR, and JPY.

An FCNR(B) deposit allows NRIs to hold their foreign earnings in a fixed deposit in India without converting the currency at the time of placement. Funds can also be transferred into an FCNR(B) account from an existing NRE account. The interest rate depends on the currency chosen and the deposit tenure, with NRIs earning a fixed rate of interest until maturity.

Key Features

• Deposits can be maintained in multiple currencies, useful for NRIs managing foreign earnings without rupee conversion
• Tenure ranges from one to five years
• Both principal and interest are fully repatriable
• FCNR(B) deposits are exempt from taxes in India

Eligibility and Requirements for an FCNR(B) Fixed Deposit

To open an FCNR(B) Fixed Deposit account, you will typically need to meet the following criteria:

• Hold Non-Resident Indian (NRI) / Overseas Citizen of India (OCI) status
• Hold a valid NRE or NRO account with the bank
• Meet the applicable minimum deposit requirement

In most cases, an FCNR(B) account can be opened through the bank's standard application process once these requirements are met, with the bank guiding you through the necessary documentation and steps.

NRE vs NRO vs FCNR(B): A Side-by-Side Comparison

Each of these accounts serves a different purpose, offering a straightforward way to manage income from various sources and move money between India and your country of residence. The table below summarises the key differences:

Choosing the Right NRI Account with RBL Bank

The right account for you depends on where your income originates and how you intend to use it. If your earnings are entirely from abroad, an NRE account offers tax-free interest and full repatriability. If you have income within India, an NRO account is built to manage it. And if you want to hold your foreign earnings without converting them to rupees, an FCNR(B) deposit offers that flexibility along with a fixed, tax-free return.

RBL Bank offers all three account types, along with dedicated support to help you choose the option or combination of options that best fit your banking needs.

• Explore RBL Bank's NRI Account Options
• Access the latest interest rates, fees, and account opening documentation for NRE, NRO, and FCNR(B) accounts

This article is for general informational purposes only. Account features, interest rates, and eligibility criteria are subject to change. Please consult RBL Bank directly or a financial adviser for the most current terms.