Who is an NRI?
NRI stands for Non-Resident Indians. Following are the individuals who are classified as NRIs:
- A citizen of India who resides overseas for employment, business, or other circumstance for an uncertain period
- Individuals posted in U.N. organisations or appointed in the Central/State Governments or Public Sector undertakings temporarily
- For some facilities, even the Non-Resident foreign citizens of Indian Origin are considered as NRIs
- Indian residents moving overseas for education
Such individuals become Indian residents when they return intending to work or start a business in India for an indefinite period. Individuals visiting India for holidays, or coming back during festivals are not termed as Indian citizens.
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Given below are some of the Frequently Asked Questions for NRI Banking in India. Let’s address them now!
Can NRIs maintain a bank account with any bank in India?
Only banks which hold the license for dealing in foreign exchanges or having the authorization to do so on behalf of RBI can offer accounts to NRIs. Certain institutions do not have the authorization but are permitted to maintain NRI accounts in rupees.
What is an NRE account?
Non-Resident External Account is a savings account held by NRIs in India. The amount in this account (Principal and Interest) is fully repatriable. The interest earned on these accounts is exempted from Indian Income Taxes.
What are the advantages of NRE accounts?
This account provides the benefit of keeping funds in Indian Rupees and converting them to foreign currency during repatriation.
Are the NRE accounts repatriable?
The entire amount i.e. the principal and the interest earned is repatriable in NRE accounts.
Can NRE accounts be operated by mandates?
Yes the NRE accounts can be operated through a POA (Power of Attorney). Though a POA can issue cheques from NRE/ NRO accounts, he cannot:
- Open or Close the account
- Gift the funds from the account
- Manage Fixed Deposit from the account
- Change the address
- Repatriate the funds abroad
Can NRE accounts be held jointly?
Yes, NRE accounts can be held jointly. However, the joint holder should also be an NRI
Does the account holder get an ATM plus DEbit card on opening an NRE account?
The account holders for NRE accounts get a Globally Valid Visa Platinum card. This card provides higher ATM withdrawal limits and 0 fuel surcharge across India
Can account holder provide recurring payments by standing instructions?
Yes, the account holder can avail this facility through standing instructions
In what currency is the NRE account maintained?
The Non-Resident External account is maintained in Indian Rupees
Are the funds in Non-Resident External Account repatriable?
Yes, the principal, as well as the interest earned, is repatriable
What is the tenure for Non-Resident External Accounts term deposit?
The duration for the term deposits is from 1 year to 5 years
What does NRO account mean?
The Non-Resident Ordinary Account is a savings account in India. This account can be funded with non-resident Indian income. This differs from the NRE account in a sense that only the interest earned in this account is repatriable and is liable for Indian Income Taxes.
Are the NRO accounts repatriable?
Interest earned, dividend, rent, and pension that is credited to an NRO account are repatriable.
Can the NRO account be held jointly?
Yes, Non-Resident Ordinary Account can be held jointly. The joint account holder can even be a resident Indian
Can the account holder access the account from abroad?
Yes, the Secure Internet Banking and Phone Banking facilities, and the ATM enable the account holders to access their account anytime from anywhere
Are the funds in the Non-Resident Ordinary Account taxable?
Yes, the interest on these savings account is subject to TDS as per the applicable rates.