What types of bank accounts are available for NRIs to open?
In line with the Foreign Exchange Management Act (FEMA) regulations, Non-Resident Indians (NRIs) are not permitted to maintain regular savings accounts in India. They are required to open either an NRO (Non-Resident Ordinary) account or an NRE (Non-Resident External) account as per the guidelines of the Reserve Bank of India (RBI).
NRO (Non-Resident Ordinary) Account: This account is for managing income earned in India. NRIs can open it individually or jointly with other NRIs. It allows for depositing income from Indian sources, remittances from abroad, or money from other NRO accounts. However, the funds in an NRO account are not freely repatriable to the account holder's country of residence.
NRE (Non-Resident External) Account: This is primarily for parking foreign earnings. The funds in this account, along with the interest earned, are fully repatriable. Moreover, the income earned through interest is tax-exempt in India.
Both accounts have distinct features suited to different financial needs and goals of NRIs managing funds within and outside India.
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