NRI Account Types And Their Differences (2023 Guide)

NRI Account-Types And Their Differences

The NRI Guides Team regularly reviews this article to ensure the content is up-to-date and accurate. The last editorial review and update were on 25 October 2023.

Many people make the common mistake of keeping their regular savings account even after they become Non-Resident Indians (NRIs), but the law doesn’t permit it. To put it simply, it’s against the rules to have a regular savings account as an NRI.

Under the regulations of the Foreign Exchange Management Act (FEMA), when your status changes to NRI, you’re required to switch your resident savings account to a Non-Resident account.

In this article, we’ll clarify the various NRI account types and what sets them apart. We’ll help you understand which NRI account suits you best and ensure you’re on the right financial track as an NRI.

Most Common NRI Account Types

If you’re an NRI, understanding the types of accounts available to you is crucial. You have two primary options to consider: the NRE (Non-Resident External) account and the NRO (Non-Resident Ordinary) account. It’s essential to grasp the distinctions between these accounts to make an informed decision that aligns with your financial goals.

What Is An NRE Account?

The Non-Resident External (NRE) account is designed for NRIs to deposit their foreign earnings in Indian Rupees. The unique aspect of this account is that you can maintain your funds in the Indian currency.

Here are some key features of NRE account:

  1. Full Repatriation: The principal amount and the interest earned in an NRE account are fully repatriable. In simple terms, you can seamlessly transfer funds from India to a foreign country.
  2. Joint Accounts: NRIs can open NRE accounts jointly with other NRIs, offering flexibility for shared financial endeavours.
  3. Nomination Facilities: You can nominate individuals to your NRE account, making it a convenient option for estate planning.
  4. Tax-Free Interest: The interest you earn in an NRE account is exempt from Indian income tax, making it a tax-efficient choice.
  5. Fund Transfer: The funds in your NRE account can be transferred to NRE, NRO or regular savings accounts.

What Is An NRO Account?

An NRO account (Non-Resident Ordinary) is an account that helps you manage income from inside and outside India. If you primarily earn money abroad but also have some income in India, this type of account is a good fit for you.

To be eligible, you should have lived outside India for more than 120 days in a year and spent less than 365 days in India within four years.

Key features of the NRO account include:

  1. Repatriation Limitations: Unlike the NRE account, repatriation from an NRO account is allowed under specific conditions. As per the RBI’s guidelines, you can repatriate up to $1 million per financial year for purposes like education, medical expenses, and current income.
  2. Joint Accounts: You can hold an NRO account jointly with residents or other non-resident Indians, providing a broader range of account holders.
  3. Nomination Facilities: Similar to the NRE account, you can nominate individuals for your NRO account.
  4. Taxable Interest: The interest you earn in an NRO account is subject to Indian income tax.
  5. Fund Transfer: The funds in your NRO account cannot be transferred to NRE accounts.

Differences Between NRE And NRO Accounts

Here are the main differences between NRE and NRO accounts:

Non Resident External (NRE)Non-Resident Ordinary (NRO)
Remittance from external sources onlyRemittance from external + local sources
The deposit is fully repatriableLimitations on repatriation
Interest is tax-freeInterest is taxable
The account can be jointly held with NRIs onlyThe account can be jointly held with NRIs + Residents
Funds can be transferred to NRE or NROFunds cannot be transferred to NRE

Which Account Should You Choose?

Choose an NRE Account If You:

  • Earn foreign income and want to deposit it in Rupees.
  • Wish to benefit from tax-free interest.
  • Plan to repatriate funds easily.
  • Prefer to open a joint account with another NRI.

Choose an NRO Account If You:

  • Have Indian income sources, such as rent, dividends, or a pension.
  • Need to open a joint account with a resident Indian.
  • Have income or expenses in India, like insurance premiums or loan EMIs.

Key Points To Note

All income that is receivable in India such as rentals from property, investments, pension etc. has to be deposited in the NRO account.

Any payment towards insurance premiums or EMIs on loans that you availed while in India can be mandated from an NRE/NRO account.

Any investment you make in India can be funded from an NRE/NRO account.

Both accounts can be opened as Savings as well as Current accounts and are Indian Rupee accounts.

In summary, opening an NRE account for your foreign remittances and an NRO account for income from India is often the ideal choice. This strategy allows you to enjoy tax-free interest and limitless repatriation with the NRE account while easily managing Indian transactions with the NRO account.

FCNR Account

In addition to NRE and NRO accounts, there’s another type of NRI account known as the FCNR (Foreign Currency Non-Resident) account.

This account is a fixed deposit account specifically designed for depositing income earned overseas and is held in foreign currencies like USD, GBP, JPY, CAD, AUD, SGD, and HKD.

Key points about FCNR accounts include:

  • They typically offer lower interest rates compared to NRE accounts.
  • FCNR deposits are less exposed to fluctuations in the value of the Indian Rupee, making them a stable choice.
  • You can hold FCNR deposits for tenures ranging from 1 year to 5 years.
  • Funds held in FCNR accounts are fully repatriable.
  • FCNR accounts are generally exempt from TDS (Tax Deducted at Source) in India.

Most banks also provide overdraft facilities against FCNR deposits, which can be disbursed in Indian Rupees and utilized within India. However, if you withdraw your deposit before completing one year, no interest will be paid.

In conclusion, understanding the various NRI account types empowers you to make informed financial decisions, aligning your accounts with your income sources and financial goals. Whether you opt for an NRE, NRO, or FCNR account, each offers distinct advantages to suit your specific financial needs as an NRI.

Reference: Reserve Bank of India

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23 thoughts on “NRI Account Types And Their Differences (2023 Guide)”

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  1. Dear Sir,
    I am an Indian, migrated to Canada and now holding the Canadian citizenship. I have NRI accounts in India and using it for transactions.
    May i know that is it legal to hold and deposit money in India/Indian bank while i am a Canadian Citizen?

  2. Dear sir
    i am working in Dubai. i have opened a NRE Account this month. i already have bank account in UAE. What is the limitation of Fund transfer to UAE Account to NRE Account ?>

  3. i have a question. I have NRE account. I want to add my wife’s name in NRE account as resident. Is it possible?

  4. Subramanian Vasudevan

    I am a new NRi aged 79 years. I have no income in US. I had opened a FD when I was a Resident in ICICI Bank and the bank has given me the Senior Citizen benefit. This FD is to mature in Dec 2017. To comply with law, I had converted my account to NRO. This change was made in Aug 2017-just four months before maturity of FD. Now ICICI Bank says that the senior Citizen benefit is not applicable retrospectively from Dec 2014 & had deducted. what ever additional paid till June 2017 (for 2 yrs & 6 months out of 3 yrs)). Is there any guidelines by RBI that the additional benefit for Senior Citizen will not be payable if the FD is changed from Resident to NRO in the intervening period of currency of thye FD? If some learned friends can advice, I would be grateful. ICICI Bank is not telling whether there is any approved rules or is it only discretionary?

  5. I have both NRE and local saving accounts. Local account is being used for rental deposits and local transactions.
    Is it acceptable having two different accounts?? Pls advise.
    thank you.

  6. shirish c mistry


  7. sir, I am working in Qatar from last 5 year, just I want to know what is the definition of NRI ? its only related with if we outside india more than 182 days means we consider as a NRI, but in my case I have income source here, but my family is staying with me, my wife is only house wife, no income source, so she also consider as a NRI. she also need to open NRE account in india ? she cannot keep normal saving account?

  8. Sadhu Singh Samra

    Specified RBI Banks are very faraway from Punjab to deposit the money Rs 25000 by NRIS brought while coming to india.why the Govt has not specified RBI CHANDIGARH,which will very helpful to the NRIs of Punjab

  9. Anjan Bhattacharjee

    Me & Wife just got our Green card. We are retired.We have no remittance back to india. We have F.Ds for
    10 years + savings a/c. Can we change over to NRE a/c F.Ds ? We have also another savings a/c with 3 in 1
    Stock portfolio. Pl advise the best alternative for change.

  10. G.Ranganatha Rao

    I would like to convert mt savings account with State Bank of India into NRO account. What happens to my Fixed Deposits.Can it remain without any change in status?

  11. I am NRI since 1980 and has NRI account. Recently I wanted to add my wife as joint account holder as resident India. I was surprised to know the resident joint account holder is not authorised to operate the NRE account , as it used to be .If this is the case do not understand the provision of inserting the joint holder.

    1. your Wife could be as mandate holder to authorised and operate your account. open with ICICI then u will have 2 ATM card- 1st card for account holder and 2nd card for Mandate holder. your wife also can withdraw money with cheque book signed by herself.
      many benefit can be avail to mandate holder.

  12. Can i get Interest for NRE account, some of my friends are saying that i will not get any interest if i keep money on the NRE account and i need to transfer it NRO account inorder to earn Interest say 4% like wise, kindly clear

    1. Hi Sundar, The information you got is wrong. Both NRE and NRO accounts give interest similar to savings bank account (around 4% for most banks). The main difference is that you don’t have to pay tax on NRE account interest, while NRO account interest is taxable. At the same time you cannot deposit to NRE account from India, while NRO account deposits can be made from Indian and overseas.
      To get more interest you can open an NRE Fixed Deposit account (interest is around 7-8% for most banks), but your money will be locked for a period of at least 1 year.
      The account that does not give any interest is Current Account, which is mainly opened by business people residing in India.

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