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There are several options available for NRIs considering opening a account in an Indian bank: Non-Resident Ordinary (NRO) Savings Account, NRO Fixed Deposit Account, Non-Resident External (NRE) Savings Account, NRE Fixed Deposit Account and Foreign Currency Non Resident (FCNR) Fixed Deposit Account. Each of these account types has certain advantages and disadvantages. Understanding them can help you in making a choice. Factors to consider include:
Key aspects of NRE accounts are as follows:
Key aspects of NRO accounts are as follows:
Key aspects of FCNR accounts are as follows:
NRE and FCNR accounts have the advantages of not having to pay taxes in India which could be a hassle for NRIs trying to figure out the tax rules in India as well as their country of residence. People opening NRE accounts and would like to repatriate their funds at some point must consider the foreign currency conversion rates at the time the funds are being deposited versus the time when the funds have to be repatriated. This can carry risks as well as rewards depending on the forex rates trend. For example, if $1000 is converted to Indian rupees at Rs. 50 per dollar and then converted back to dollars at a conversion rate of Rs. 40 per dollar, then you would get back $1250 for a good gain. On the other hand, if the dollar is at Rs. 55 per dollar, you would lose some of your principal when you do the repatriation. FCNR accounts do not carry any forex rate risk as the accounts are always maintained in the foreign currency. NRO accounts have the advantage of being able to deposit funds from both sources in India and abroad and having joint account holders in India. Repatriability of funds is a disadvatage for NRO accounts. The key advantage of NRO fixed deposit accounts is the substantially higher interest rates as compared to FCNR and NRE accounts. Check Ratekhoj for latest NRO fixed deposit interest rates offered by various banks in India. The rate of interest offered is different in different banks and also depends on the fixed deposit tenure. So your choice of which bank to open a account in can depend on the interest rates. FCNR and NRE fixed deposit accounts typically yield much lower than NRO fixed deposit accounts. Check Ratekhoj for latest FCNR and NRE rates. Most banks in India offer the same interest rate for FCNR and NRE fixed deposit accounts. So if you are planning to choose a bank for your NRE or FCNR fixed deposits, interest rates offered is not a consideration. Both NRE and NRO savings accounts yield 3.5% currently. There is no savings account option for FCNR accounts. NRE Savings and NRO Savings accounts allow you to have family members in India as mandate holders whereas you cannot have mandatees for the fixed deposit options available in NRE, NRO and FCNR accounts. Mandate holders can withdraw funds from your accounts in India with some type of a card such as a debit card of a ATM card. They can also withdraw funds at the bank locations. Banks such as Citibank allow you to even specify certain conditions on the amounts of withdrawals allowed per month on the operations of the mandatee. Most banks also provide for taking loans for a certain percentage of your existing balance on your NRE, NRO and FCNR fixed deposit accounts. Check with the banks for details on loans. Comments2 Responses to “NRO, NRE and FCNR accounts for NRIs: Pros and Cons to consider before opening a account” Leave a Reply |
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NRO, NRE and FCNR accounts for NRIs: Pros and Cons to consider before opening a account…
There are several options available for NRIs considering opening a account in an Indian bank: Non-Resident Ordinary (NRO) Savings Account, NRO Fixed Deposit Account, Non-Resident External (NRE) Savings Account, NRE Fixed Deposit Account and Foreign Cur…
[...] NRO, NRE and FCNR accounts for NRIs: Pros and Cons to consider before opening a account [...]