Opening a bank account in India as a Non-Resident Indian (NRI) involves a set of specific regulations and procedures. NRIs, Persons of Indian Origin (PIOs), and Overseas Citizens of India (OCIs) are eligible to open an NRI bank account in India. PIOs and OCIs are eligible for most NRI account types, but certain accounts might be restricted to NRIs.
Types of NRI Accounts
There are different types of NRI accounts to choose from, each serving specific purposes:
- Non-Resident External (NRE) Rupee Account: Allows you to maintain foreign currency earnings and repatriate funds. Interest earned is tax-free.
- Non-Resident Ordinary (NRO) Rupee Account: For managing income earned in India, such as rent, dividends, etc. Interest earned is taxable.
- Foreign Currency Non-Resident (FCNR) Account: Holds foreign currency deposits for a fixed tenure. Both principal and interest are fully repatriable.
As per the Foreign Exchange Management Act (FEMA) guidelines, an NRI cannot have a resident savings account in his/her name in India. You can find more details from RBI guidelines.
Documents Needed to Open an Account
The required documents may vary slightly from one bank to another, but generally, you’ll need a passport, valid visa, overseas address proof, Indian address proof (if available), passport-sized photographs, and a PAN (Permanent Account Number) Card.
An NRI may apply for PAN by submitting Form No. 49A along with the requisite documents and prescribed fees at the PAN application centre of UTIITSL or Protean. NRIs who earn money from a job, a home, capital gains, or other sources may file Form ITR-2.
KYC Compliance
Banks in India adhere to ‘Know Your Customer’ (KYC) norms. This requires submitting your identification and address proofs, along with filling out KYC forms. These regulations ensure the legitimacy of transactions and prevent money laundering
In-Person Verification (IPV)
Some banks might require you to undergo an In-Person Verification (IPV) process. This can often be completed at Indian embassies, consulates, or designated branches of the bank in your current country of residence.
Repatriation of Funds
NRE and FCNR accounts are fully repatriable, allowing you to transfer both principal and interest to your foreign account without restrictions. NRO accounts have some restrictions on repatriation, usually subject to certain conditions and limits.
Tax Implications
Interest earned on NRE accounts is tax-free, while interest on NRO accounts is subject to taxation as per Indian income tax laws. Additionally, any income earned in India could be subject to taxation.
Nomination
You can nominate a nominee for your NRI accounts, which ensures a smooth transfer of funds to your chosen person in case of your unfortunate demise.
Currency of Accounts
NRE and FCNR accounts can be maintained in foreign currencies (like USD, GBP, EUR), while NRO accounts are usually maintained in Indian Rupees.
Currency Conversion
Currency conversion services are available through banks, but exchange rates and fees may apply. You can choose to hold multiple currencies in your accounts.
Online Banking Services
Many banks offer online banking services for NRIs, allowing you to manage your accounts, make transactions, and monitor your funds remotely.
