Moving abroad garners many changes. This includes how you handle and manage your money through banking. For instance, you cannot rely on your resident Bank Account for everyday transactions. You must either opt for a new one with a foreign banking partner. You could also convert your old account into a Non-Resident Indian Account.
An NRI Account is meant for NRIs. It allows them to park their foreign earnings safely. It facilitates their banking and investment needs once they move away from India. Such an account comes in three distinctive types:
- Non-Resident External Account
- Non-Resident Ordinary Account
- Foreign Currency Non-Resident Account
Out of these, let us discuss the aspects of an NRE Account. Following is a quick guide on it.
- Rupee-denominated
An NRE Account is Rupee-denominated. This simply means that it maintains your deposits in Indian Rupees. The function stays consistent across all types of such an account. For example, it does not matter if you hold an NRE Current or NRE Fixed Deposit. Your funds will be retained in Indian Rupees regardless of the type.
- Fund maintenance or transfer
You can hold funds received from another country in your NRE Account. The same goes for transfers obtained from another NRE or FCNR Account maintained in India. Also, it is possible to transfer money from your NRE Account to an NRO Account. The process involves no restrictions or extensive formalities.
- Repatriation
This account offers you full repatriation. You can freely transfer the funds in your Bank Account to another country or another NRI Account. Therefore, many NRIs with financially dependent families open an NRE Account online. It allows them to send money to India without any hassles.
- Conversion
Many Indians move overseas for a brief period. When they come back, they get the option of converting this account into a regular resident account. The procedure for this conversion, however, varies from bank to bank. Hence, it is best to check the guidelines for conversion beforehand.
- Joint holding facility
At times, you might want to open an account with a family member living overseas. Considering this, an NRE Bank Account offers you a joint holding facility. You are allowed to hold the account jointly with another individual. However, the co-holder must be an NRI. Else, they cannot avail of this facility.
- Taxation
The most appealing aspect of an NRE Account is its taxation policy. Interest earned on deposits in this account is exempt from taxes. This benefit is enjoyed by all, NRE FD, Savings, and Current Account holders. That way, everyone with this account gets to optimise their interest earnings without any worries.
- Transfer rules
A resident power of attorney cannot open an NRE Account on the NRI’s behalf. However, they are permitted to make local rupee payments and transfers on the NRI’s behalf. There is no imposition on such transactions.
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