6 Advantages Of An NRI Account

People love travelling and exploring new things all around the world. They are always searching for better opportunities for growth and development. They aim at progress and prosperity in their lives. They have some goals and aspirations to achieve and try to make the best use of every chance in life.

When they settle abroad for work or even go there for a vacation, it is safer to be financially prepared. Emergencies and alerts come without warning, whether in India or any country in the world. They can always secure themselves financially by opening an NRI savings account to help them meet their expenses while they are away from their parents residing in India.

There are different kinds of an NRI account to guide Non-resident Indians of different residential statuses. They can open an NRE or an NRO account and enjoy the benefits they offer. According to the Indian government, an NRI is a person who has not stayed in India for a year because the primary source of income and employment is abroad.

Here are the advantages of opening the account:

1. Tax advantages: It is the most significant motive and gain of opening an NRE account. Interest earned on this type of NRI bank account as well on NRE fixed deposit exempts tax in India. They are not added up even in the taxable profits and helps in gaining revenue in India.
   
   
2. Repatriation advantages: Another advantage of NRE account is repatriation. It allows trouble-free movement of cash because it is possible to repatriate both interest and principal overseas. Cash amounts in NRE accounts are fully and completely repatriable.
   
   
3. Low balance required: Nowadays, most of the private and public sector banks have low balance requirement for NRI account opening. The minimum balance requirement is as low as INR 10,000.
   
   
4. Convenience: Another advantage of foreign currency account is handiness. Most of the banks allow individuals to open them online via the Internet. They need to fill a form online, take a printout, and affix the self-attested print of necessary papers and send to the bank in India.
   
   
5. Joint holding: The account allows individuals to apply jointly with relatives having a resident status. They must file a declaration of the status of the NRI and submit the necessary documentation as asked by the bank.
   
   
6. Accessibility: The saving account for NRI typically comes with an International Debit card. It gives convenience benefit of shopping globally, booking air tickets online, buying life insurance, and withdrawing cash abroad. They must also check the NRI account interest rates before applying for any term deposit scheme in the concerned bank. They can always use the bank’s website or app to apply for it no matter where they are.

What Are The Benefits And Challenges Of Private Banking?

Private Banking means personalised financial and banking services to the high net worth individuals. Usually, HNIs are those who own a business, acquire more wealth and therefore, require the private banking services with access to alternative investments. As such, private banks act as mediators and offer their assistance to such individuals regarding their investments. 

Priority banking includes exclusive investment-related advice, protecting, and growing assets in the present, offering specialised financing solutions, planning retirement, and passing wealth on to future generations. 

Benefits: 

• Privacy: The services offered via privilege banking are highly confidential between the institution and the consumer. Their approach is exclusive to their customers so that the competitors do not lure a potential client with a similar solution. 

• Customised services: Prominent banks make sure that HNIs receive tailor-made services based on the assets they hold. An account or relationship manager gets assigned to each who allows accessing mid-level upper management directly. This easy access minimises any obstacles for offering inputs regarding wealth management decisions, and the bank can strategise the decisions according to the client's financial decisions. 

• Incentives: HNIs are the main clientele for banks, solely because of the substantial assets they bring to the institution. They get rewarded with special private banking services like tax preparation and planning, traveller's cheques, or corporate checking at discounted rates. 

• High returns: Most of the HNIs receive higher returns from their investments that outperform the market. 

Challenges: 

• Regulatory restrictions: Regulations in India are not equipped to deal with the kind of products and services that private banks sell. Few investments are not regulated by an authority making it difficult for the investors to redress their grievances. Only a few have the liberty and control do so yet.
   
• Lack of expertise: Preferred banking requires financial analysts who build strong, lasting and trust-worthy relationships with HNIs. There is a shortage of experience and training. Hence, recruiting, training and retaining qualified professionals is a priority for most banks. Such services target keeping the customers when it should be focusing on teaching the right individuals. 
  
  
• Private Banking in India: Banks like  ICICI Bank, HDFC Bank, Axis Bank, DBS Treasures, and Standard Chartered are India's top private banks in which the majority of investments get undertaken by foreign investors even though management control are with Indians.

 

How Are Private Banking And Wealth Management Different?

For any high net-worth person, managing wealth is the most crucial prerequisites. Such people often seek services from private wealth management companies which offer specialised financial solutions. These companies also hire financial experts who lend their expertise to clients, helping them invest in different instruments based on their financial objectives and risk appetites. People often believe that these wealth management services also offer private banking facilities.

However, that is not the case. Here are how both the concepts are different. We shall look at some points that explain the same.

Services offered

While both wealth management and private banking services have asset management as its core, the wealth management companies provide consultation and advisory services. Prominent facilities offered by the wealth management firms include investment planning, portfolio development, asset structuring, tax, retirement, and estate planning, among other things. On the other hand, privilege banking offers banking features like brokerage services, asset management facilities, and essential tax consultation.

Difference in approach

Both banks and private wealth service provides unique products for their HNI and ultra HNI clients. However, both entities have a vast difference in their approaches. Such high-profile clients are provided with customised one-to-one models, wherein the bank representative handles all the banking needs. Such services include doorstep cheque collection, cash deposits, specialised current and savings account with high balance requirement, high-interest rates, and overdraft and loan facilities.

Wealth managers tend to focus on offering financial advice and concerned about maintaining, collecting, conserving, and compounding wealth. These experts primarily monitor their client evolution and assist them in achieving personal and financial goals over the years.

Different in options

The other aspect to focus on wealth management and priority banking is the opportunities offered to the clients. Banks can provide their clients with only a limited number of specific products under their portfolio. There is little room for delivering a host of options for such clients. However, wealth management has the opportunity to leverage and implement tailored solutions. Here, the manager recommends many products from different institutions, thus enabling their clients to select from those which suit your requirement.

Relationship with clients

Building a relationship is considered a virtue in the field of wealth management and preferred banking as well. The wealth manager needs to understand not only the client’s financial goals and aspirations, along with concerns. The wealth manager also needs to work towards offering a financially peaceful and comfortable life for the clients and their family, during and after the client’s death.

As for private banking, bank representatives are more invested in forging a personal relationship with the client. The facilities offered also need little time since they are packaged. The products are adapted according to the high or low-risk appetite, keeping the client’s asset volume in mind.

2 Types of RD Interest Rates

 One of the most popular and preferred investments in India are recurring deposits. They help people start earning returns every month throughout their tenure and inculcating a habit of saving in them. A lot of people trust banks and financial institutions for their products as they are safe, reliable and involve less risk. They are also providing guaranteed returns and allow investors to use their money for making more profit.

One can earn RD interest rates over a fixed tenure ranging from up to 5.2 per cent per annum on their RD account. They are like fixed deposits, but the flexibility of monthly instalments is a unique characteristic of this account. The minimum tenure for the deposit is six months and expandable up to 10 years.

The recurring deposit interest rates differ from banks and on various factors, including the investment category and tenure. Almost all banks have the facility of providing senior citizens with a higher rate of interest than regular customers. Banks offer a variety of interest rates, and apart from standard schemes, they also have additional ones reserved for people to achieve specific goals.

The following are the types of interest rates offered on RD by several banks in India:

1. Regular RD savings scheme: Indian banks offering recurring deposit schemes online through websites and banking apps have specific terms for citizens to follow. Only those individuals aged above 18 years can open this account. Customers can choose their deposit amount, which remains fixed for a tenure of six months to 10 years. The interest gets calculated on a simple or compound basis. They can withdraw the lump sum amount at the end of the deposit term.
   
   
2. RD schemes for senior citizens: Senior citizens can also benefit from a comparatively higher rate of interest from RD schemes. Moreover, there are also some schemes available that help them plan their retirement.

A person should be aware of the recurring deposit rates and choose the options to help them meet their investment goals. Smaller sums of money invested over some time multiply with interest and help them achieve specific goals. They are an ideal option for saving to spend on new gadgets, travel plans and other goals. It does not harm the budget at all and makes all the purchases economical.

These financial instruments help create goal-specific savings to help investors plan their budget. They also offer flexible payment facilities like daily, monthly, and quarterly payments which are accessible on the website as well as the app.

Overview of Wealth Management

 The highest level for financial planning services is wealth management. In addition to financial counselling, tax guidance, estate planning and even legal aid, wealth management typically requires extensive investment management.

Wealth management companies provide investment management and detailed investment advice. Wealth managers tackle complicated financial issues and coordinate on behalf of investors with financial experts.

The highest level for financial planning services is wealth management. In addition to financial counselling, tax guidance, wealth account and estate planning and even legal aid, wealth management typically requires extensive investment management.

The type of service a wealth management company provides is ideally suited to wealthy clients. But while you may not need wealth management now, over time, your needs are likely to shift. It might be time to look into wealth management at some point.

In general, investment managers direct their services at the extremely wealthy. They may have experience in the types of financial problems impacting the ultra-wealthy, such as how to avoid property tax. Sometimes, they arrange resources between various experts, such as collaborating on your behalf with a lawyer or an accountant.

Is it a good idea to have a wealth manager?

A wealth manager should be able to help with all your financial planning needs, including, for instance, the management of company income tax implications and the creation of a donor-advised fund for your charitable donations.

Financial advisors may provide wealth managers similar services, but they will also encourage you to buy services on an "a la carte" basis. For instance, if want to meet your retirement needs, some financial advisors will work with you to develop a retirement income plan and pay for that service alone.

If you need help with estate planning, advanced tax assistance or investment advice, securing and maintaining your assets later might be worth opening a wealth management account.

Wealth management vs portfolio management

Wealth management provides investment planning which is higher than fund management. It offers detailed advice on the financial position of a client, including, in some situations, wealth management account, estate and tax planning, accounting, retirement planning and even legal guidance.

Portfolio management involves a service or person who, on behalf of a customer, designs an investment plan. Portfolio management provides investment picking that minimises risk and maximises returns but usually does not include other resources for financial planning.

If those minimums of wealth management are more than you negotiated for, then you do not require one. Although some financial planners often concentrate on ultra-wealthy consumers, there is a rising community of financial advisors working for both affluent and middle-income individuals. Any of these consultants work online.

Advantages of Opening NRI Bank Accounts

 Banking services have evolved drastically today. Banks offer all kinds of accounts apart from the traditional savings and current accounts. Today, you can open online accounts, zero balance accounts, special account for women, children, and seniors and so on. Moreover, all your banking needs can be addressed without ever stepping foot in the bank.

Recognising the fact that more and more Indians are considering foreign prospects, banks also offer NRI bank accounts. These accounts enable Non-Resident Indians to conduct their transactions from any corner of the world. Here are the advantages of opening an NRI account.

Advantages of NRI bank accounts

There are two main types of NRI accounts in India. The primary benefits are –

1. Repatriation advantages

One of the most prominent advantages of NRI bank account is the repatriation advantage that comes with it. You can quickly repatriate and move funds from both, NRE as well as NRO accounts. You can repatriate both, the principal sums parked, and the interest earned on the deposits from your accounts while you are abroad. While the funds in the NRE account are freely and fully repatriable, you can repatriate funds from NRO account after paying the applicable taxes.

2. Convenience

Another essential advantage of these accounts is that they are very convenient. Most banks allow the customer to open online NRI accounts. You can be based in any foreign country and open your account remotely, only by filling the account opening form and attaching the necessary documents. You can use your net banking platform to open this account and avail all the features and benefits that go with NRI bank accounts.

3. Tax Benefits

Before you finalise your NRI savings account – whether an NRE or NRO, you should read up about the tax benefits that come with both accounts. This will help you select the right kind of account. In India, the interest you earn on both, NRE savings bank account and your NRE fixed deposits are tax-free. However, the savings parked in the NRO account and your NRO FD is subject to TDS by the Income Tax laws of India.

4. Minimal balance maintenance

Several banks offering NRI Accounts in India have reduced the minimum balance requirement to a considerable extent. Most banks require their account holders to maintain as low as INR 10,000 as minimum balance in their accounts. This has contributed to the popularity of NRE and NRO savings accounts among customers.

5. FCNR deposits

NRI Account holders can also book Foreign Currency Deposits. This is ideal for customers who to save their earnings in foreign currencies and earn interest on it. It is especially beneficial if you are earning in a currency that is higher in value as compared to INR, as it can promote higher savings. Moreover, the interest you earn on your FCNR deposits is tax-free in India.

Facts About FCNR Deposits You Should Know

 For creating a corpus, you need a good amount of savings and investments. You can place your money away in a bank fixed and recurring deposits or even invest in the share market. The idea s to plan the investments such that you accrue high returns and liquefy the investments when needed. If you are a conservative investor and prefer to park the savings securely, fixed deposits are the way to go. NRIs, too, can turn their foreign currency earnings into fixed deposits.

Yes, you can open a foreign currency non-repatriable deposit or FCNR account. But there are some facts that you should be aware of before opening one.

Not an account but a fixed deposit

Most NRIs think that FCNR is an account. But instead, it is a deposit. As an NRI, you can either open an NRE or NRO account. You can deposit foreign currencies in the former account and INR in the latter. Once you have adequate savings in the NRE account, you can create a fixed deposit of the same. These FDs are called as NRE fixed deposits, a term often used with foreign currency account.

Maintain deposits in different currencies

Many banks enable you to maintain the fixed deposits in different international currencies. Generally, the currencies in which you maintain the FCNR deposits include Britain Pound, Euros, Yen, Swiss Francs, Krone, and Krona. You can also maintain the FD in dollars such as American, Australian, New Zealand, Canadian, and Singaporean.

Be aware of tenure and premature withdrawal penalties

You can open FCNR account for a tenure ranging between a year to five years. A handful of banks offer 10 years tenure for such deposits. The best part is that they are risk-free and you need not worry about currency fluctuations. Also, the FCNR rates are in foreign currency where the FD gets maintained. You can also prematurely withdraw the FD before the term ends, but you need to bear the penalty for premature withdrawals. If you want to break the FD before a year, you may not be eligible for any interest rates on the deposits.

Open the deposit online

As an NRI, it might not be possible for you to visit the Indian banks and create a fixed deposit. Precisely why, all banks offering NRI facilities, enable you to open FCNR account online. It should consider account where the foreign currencies get deposited such as NRE or FCNR. You can easily create the FD by transferring funds from either of the account through wire transfers. You can create this FD while in India by depositing the travellers’ cheque or make foreign earning cash deposits.