Non-Resident Indians Bank Account: Things You Need To Know

A bank account plays a major role in everyone's life. It helps people to deposit their cash and stay tension-free. When it comes to NRI bank accounts then Non-resident Indians are eligible to open three types of bank accounts in India, including NRE account, NRO account, and FCNR account.

Are you a NRI and want to open a bank account in India? Before that, you need to know that to open an account it is essential to stay at least 120 days in India and spend less than 365 days in the last four years. By doing this your residential status will be converted into an NRI according to Income Tax Act 1961. But later in the year 2020, NRIs need to spend 182 days along with 2 years instead of 4.

Each account has ample benefits, including fulfillment of their investment objectives, financial obligations, and more. It depends on the type of NRI account that your earnings originate from India or your country of residence. Are you confused about which type of account suits you, the benefits of an NRI account, and more? If yes then this blog is going to be helpful for you. Stay tuned with us and learn about all the types of NRI bank accounts.

Types of Non-Resident Indians Bank Account:

There are three types of NRI bank accounts and each one has its benefits. Let's shed light on each of them.

NRE Account

The NRE account stands for Non-Residential External. This type of NRI bank account can be opened and managed by non resident Indians. With the use of this bank account NRIs maintain their earnings originated from the country of their residence and held in Indian rupee.

NRO Account

It is another type of NRI bank account and here NRO stands for Non-Resident Ordinary account. When we talk about this type of account then NRI can manage their Indian-originated earnings and shall be held in that deposit account in INR denominations. In this account holders can deposit rent, dividends, etc and there is no step of currency conversion involved.

FCNR (B) Account

This NRI bank account is called FCNR or we can call Foreign Currency Non-Residential Account. Accepts deposits from Non-Residential Indians (NRIs) or Persons of Indian Origin (POIs). Both PIOs and NRIs can deposit the currency of their country of residence as prescribed by RBI.

Let’s check out the currencies that can be deposited in the FCNR account as follows: US Dollars (USD), Canadian Dollars (CAD), Australian Dollars (AUD), Euro (EUR), Great Britain Pound Sterling (GBP), Singapore Dollar (SGD), Hong Kong Dollar (HKD), Japanese Yen (JPY) and Swiss Franc (CHF).

If you are an NRI and your earnings are from any of the above-mentioned currencies then it is not a subject of conversation. On the other hand, if you earn in any other currency, then the deposits made in this NRI bank account should be converted to any one of the prescribed currencies.

Differences between NRO, NRE, and FCNR NRI Bank Accounts

After knowing the type of NRI bank accounts and the difference between all of them. It's time to make a list of required documents for an NRI Bank account.

Documents Required for NRI Bank Account

• Application form
• Photocopies of different pages of the passport containing details such as name, address, birth date, date of passport issuance and expiration, etc.
• Employment proof
• Work permit, Student Visa, Visa permit, Employment Visa, or Residence Visa
• KYC documents (if any)

Eligibility Criteria for Opening an NRI Account

When we talk about the eligibility criteria for opening an NRI bank account like NRE, NRO, and FCNR (B) accounts then it depends on the banks. However, specific eligibility criteria are followed by every financial institution in India regarding NRI accounts.

• NRI Should be employed, own a business, or practice some form of trade in a foreign country
• Employed with the Indian Navy, airlines registered with a foreign country, an oil rig, or overseas shipping companies that necessitate that individual to be outside India for at least 182 days.
• Government employees possessing diplomat passports
• Students pursuing education in foreign countries

As we all know everything has some advantages and disadvantages. So are you excited to know both about NRI bank accounts? If yes then stay connected with us next we will shed light on the pros and cons of NRI bank accounts.

Advantages of an NRI Account?

Facilitates investment in financial instruments

There are several advantages of NRI accounts and it is the primary one. By having an NRI account Non-resident Indians can partake in stock markets, trading, and be a part of other investment schemes. RBI allows NRIs to trade in market-linked financial instruments such as equity shares or debt instruments through their NRI bank account.

Tax benefits

FCNR (B) account holders will get tax-free interest earnings on their deposits according to the Income Tax Act 1961.

High returns

Every account holder wants a high return on their investment on fixed deposits. NRIs get substantial returns on total deposits on NRE FDs or FCNR at negligible risks.

Avoidance of exchange rate fluctuations

If NRI opens an FCNR account then they can avoid exchange rate fluctuations and consequent reductions in converting currency into INR.

Disadvantages of an NRI Account

Low liquidity

Particular NRI account holders opt to invest in FCNR to protect their finances from exchange rate fluctuations. They can only open a fixed deposit account with a maturity period of 1 to 5 years.

Prone to risk

If an NRI account holder deposits foreign currencies in an NRE account they are subject to conversion into Indian rupees. The deposited amount will fluctuate because of the appreciation of the domestic currency and the depreciation of the foreign currency.

Summing it up:

This blog belongs to non-resident Indians who want to open a bank account in India. With the help of this post, they will learn about the different types of NRI bank accounts. Additionally, we also mentioned the difference between NRO, NRE, and FCNR accounts, the documents required, and the merits or demerits of NRI bank accounts. Still, if you want someone's help then we suggest you connect with Visament. They will assist you in opening an account. Alongside choosing them you can also get help related to any immigration service like OCI, NRI, PIO, passport, and more.