Non-Resident External:
NRE account is opened by an NRI in his own name to manage the money he earned from outside India. Balance and interest earned on NRE accounts are non-taxable. In NRE accounts, the principal amount, as well as the interest, can be transferred to a foreign account, in other words, it can be repatriated. The NRE account can only be made jointly with other NRIs. In the NRE account, the exchange rate risk is high due to currency fluctuations. NRE accounts are advantageous if the NRI has a family in India to look after. It is very useful transaction-wise and also offers better interest rates.
Read More: Who All Come Under The Ambit Of PIO? Their Rights And Restrictions
Why should an NRI opt for an NRE account?
- These accounts can easily be accessed and funds are easily movable
- It gives you more control of your money as the funds in these accounts are not taxable in India
- As this account is maintained in INR, it is beneficial for crediting money that is transferred from a foreign account
- Easy investment can be done in India if the account is linked with an investing or trading account
- With the help of an international debit card, money can be withdrawn from anywhere
Non-Resident Ordinary :
An NRO is a Non-Resident Ordinary (NRO) Account, defined under sec 2 (viii) of Foreign Exchange Management (Deposit) Regulations 2000. It is a popular means for many Non-Resident Indians (NRIs) to manage their deposits or income earned in India such as dividends, pension, rent, etc. This account allows you to receive funds in either Indian or foreign currency. This enables an account holder to deposit and manage accumulated rupee funds without any hassle. To invest money in India after becoming an NRI, it is essential to hold an NRO account. The NRO account can also be opened to make bona fide transactions in INR.
Why should an NRI opt for an NRO account?
- NRIs can deposit their income earned from India such as rents and dividends securely and the same can be used to manage expenses in INR
- With an NRO account, it becomes easy to invest in mutual funds and bonds in India
- Fixed deposits in NRO can be used as collaterals against loans, the interest rate on these are lesser than that on unsecured loans
- Fulfill commitments in India with ease as a family member can be a joint account holder to look after the finances
- DBS treasures offer higher rates on the savings account of an NRI and preferential rates on remittances
Foreign Currency (Non-Resident) Account:
FCNR account is a type of account that is not a savings account like NRO and NRE but is a fixed deposit account opened for depositing the money earned overseas. It is an extremely feasible option to maintain funds in India. The account is held in foreign currency. Most banks book FCNR deposits in the currencies as mentioned below:
- US Dollars
- Pounds Sterling
- Euro
- Japanese Yen
- Australian Dollars
- Canadian Dollars
Why should an NRI opt for an FCNR account?
- The FCNR account is the best option when it comes to investment if the intention is to retain the money in foreign currency. Due to this, the risk of exchange rate fluctuations can be prevented
- Higher risk-free returns are seen
- Premature withdrawal can be done but interest can be received only after a year is completed and the interest is not taxable in India
- Overdraft facility is also available on the FCNR term deposit account
- The amount deposited in these accounts and interests earned on these are repatriable. These accounts allow automatic renewal of deposits upon maturity
- To save money in foreign denominations, an FCNR account can be a perfect choice for NRIs
