Different Types of NRI Account in Indian Banks

An NRI account is opened by a Non-Resident Indian (NRI) or a person of Indian Origin (PIO) with the RBI-authorised bank or a financial institution.

Types of NRI banking Accounts 
It is quite reasonable for an NRI to get confused about what to do with the existing bank accounts. Especially for a person who already has three to four savings accounts in India and is moving abroad for some time, then comes the dilemma of what to do with the bank accounts. The banking services and operations for an NRI account is slightly different from that of regular savings bank account. The following are the different types of NRI banking accounts –

1. Non-Resident External (NRE) Account 
2. Non-Resident Ordinary (NRO) Account 
3. Foreign Currency Non-Resident (FCNR) Account 

Non-Resident External (NRE) Account: 

• An NRE account is opened in India by an NRI to save their foreign earnings. It allows you to transfer your foreign earnings instantly to India. 
• For this, you need to open an NRE account and deposit your foreign currency from abroad. 
• In an NRE account, you can deposit money in any foreign denominations and withdraw it in Indian rupee. At the time of deposit, the amount is converted into Indian rupee and credited to your account.
• The principal amount and the interest you earn from an NRE account is non-taxable in India. 

Non-Resident Ordinary (NRO) Account: 

• An NRO account is an ordinary saving account opened by an NRI.
• NRO account helps NRIs to manage the income earned in India and abroad. This includes rent, dividends, subsidies, pension, or any amount you receive.
• Both foreign and Indian currencies can be deposited in an NRO account, but the withdrawal can only be made in Indian Rupees.  
• Under this account, you can deposit Indian money and manage the services like any other savings bank account. 
• Interest income earned on an NRO account is liable for TDS (Tax Deductible at Source). 

Foreign Currency Non-Resident (FCNR) Account:

• If you are an NRI and wish to open a fixed deposit account in India, then the FCNR account is the preferred choice for NRI services. 
• An FCNR account is opened and maintained in foreign currency. The deposit in FCNR account is not subject to any exchange rate fluctuations. 
• You can open an FCNR account for a minimum of 1 year and a maximum of 5 years. You can withdraw the FCNR amount before completion of the selected term, but the premature withdrawals are subject to penalties. 

There are multiple of NRI banking services available for non-resident Indians to do their banking activities in India. Even NRI online banking is one of the famous banking services for an NRI. 

What are the NRI net banking services available?

Moving to a foreign country for a better standard of living and earnings, but confused about the banking services? This article will take you through the internet banking facilities available for an NRI.

Every bank considers NRIs as its premium customers and provides custom banking tools that fit their requirements. When it comes to banking, there are NRI banking services which extend to online, helping the NRIs to stay back at home (abroad) and do the financial transactions at ease.

NRI internet banking is one of the preferred and most beneficial banking services for an NRI. No more visiting the branch and clarifying the deposit and currency fluctuation rates when everything today is accessible at your fingertip. So, let’s have a look at the net banking services available for an NRI:

• Inquiries – be it an inquiry about your account or a mini statement, with NRI banking online, one can quickly get access to his/her account details, within no time. You can reach customer support for all your queries regarding your account.
  
• Fund transfer – one of the most useful and beneficial banking services of an NRI is the fund transfer. Gone are those days of visiting a foreign exchange centre to transfer the funds to India instantly. Today, the use of mobile banking or internet banking has made it easy for the NRIs to immediately send money, which gets credited in the NRI savings account within seconds.
  
• Requests – this includes chequebook/ DD request, Aadhaar number linking, changing the username or password, changing the two-factor authentication, blocking debit/credit card online, customizing the fund transfer limit, etc.
  
• Alerts – receiving important account-related alerts – including deposit and withdrawal, minimum balance alert, fraud risk management alerts, loan repayment alerts, service breakdown/ server upgrade warnings, etc.
  
• Bill payments – like the fund transfer, NRIs have benefitted a lot with the online bill payment. With a single tap on the mobile, you can pay your utility bills, electricity bills, telephone bills, insurance premium payments, online shopping bills, donations, tours and travels, hotel bills, fee payment, gas/ newspaper bills, etc.
  
• Security features – whether it’s a standard savings account or an NRI account, the security factors are the same for every account. Net banking allows e-security ensuring 128-bit encryption and using second-factor authentication for high-value transactions.
  
• Investment options – these days, every online banking platform provides investment options where an NRI can invest your foreign earnings in mutual funds or SIP or shares. You don’t have to come to India and visit an investment broker for investing in any options.
  
• Loan against deposit online – an internet banking NRI user can avail for a loan against their deposit at any time. The loan will be processed and opened instantly by crediting the loan amount within a day or two.

The online use of NRI banking services is pretty much simple. It has helped the NRIs all across the world to quickly transfer funds from abroad to India without any delay in processing. 

Benefits of Opening An Online Saving Account

Since years, people have been securing their money in the savings accounts of their banks. It ensures mental satisfaction and asset security for all account holders. Those who have a saving account earn interest on it and use it as and when required. They are easily accessible to the respective account holder and offer services like fund transfers from other accounts using IMPS, RTGS, NEFT, or even UPI, where account holders can earn interest on their deposits.

The applicable interest rates range between 3.5 per cent to 7 per cent per annum and differ bank to bank. Customers have the liberty to deposit or withdraw their money by submitting cheques or withdrawal slips. They can also take the help of ATMs to solve the purpose by applying for debit cards linked to their bank accounts.

The key features of saving accounts
A saving account helps customers track the inflow and outflow of money from their accounts. They enable banks to provide passbooks, debit-cum-ATM cards, cheque leaflets, internet banking facilities, bank statements, and even free SMS and email alerts for every transaction made. Bank account holders have unique and personalised account numbers with no limitation on deposits. Linking recurring deposits or even EMIs to the savings account is possible.

Types of accounts available
There are two types of accounts available:

• Minimum Balance Accounts: Initially, customers had to maintain a minimum balance in their account for the same to remain active. This policy varies, like the rates of interest offered by them. The account holder pays a fine for not following the rules and not maintaining minimum account balance.
• Zero Balance Accounts: With a change in banking services, zero balance accounts have also come in to effect. People convert regular saving accounts to zero balance accounts so that they avoid the penalties in future. Zero balance saving account services are also available.

The eligibility criteria
Those interested in opening accounts in banks need to follow some standard eligibility criteria laid down by banks.

1. The account holder should be a resident of India.
2. The age limit to open bank accounts is 18 years and above. Accounts are available for minors as well that are taken care of by parents/guardians.

There are many eligibility calculators online that can help users determine their eligibility to open bank accounts.

Benefits of opening online savings accounts
Technology has emerged as a winner for all the fields of business and banking. It ensures quick and safe connectivity within parties. The accounts used to save resources, such as income, can be tracked and used to make transactions via the internet or mobile banking apps. Online bank account opening with zero-balance helps increase accessibility by making themselves available on online banking platforms. Online documentation services are also available like KYC. Customers can contact helpline numbers through calls and emails for clarifications of queries or report of issues.

What Is A Savings Account?

In a situation where an individual has earned a surplus amount or got funds which they do not want to use and keep it safely, what are they to do? Stuff the funds under their bed? Keep it in a secure location that only they know about? No. Financial institutions and banks have a safe tool that is called a saving account. It is the most lucrative instrument offered by financial institutions and banks. In a situation where an individual has got surplus funds, and they wish to park it in a haven, a saving account comes handy.

The upside to holding an amount in a savings account is that the individual can earn interest on the amount and gets access to it any time they want. A saving account can be helpful in specific situations where imminent funding is required. It is a safe banking tool used by customers to make sure their money is always accessible. Funds can be deposited in the account through cash or cheques. As the name suggests, it is a great way to save funds for future.

One of the most famous by-products of a saving account is a zero balance saving account. Several banks have evolved with the ever-growing technological industry and provided their customers with the online option as well. These features have revolutionised the banking industry and made things easier than ever. Generally, these accounts are offered to individuals with weak economic backgrounds. A zero-balance account holder need not maintain any minimum balance. Primary KYC documents are required for opening these accounts.

Reasons why opening a saving account is a reliable option always –

1. Different accounts offered by these institutes nowadays come with desired features and provide links to pay bills, help in making secure transactions to the account holder as they log into their account.

2. Holding a saving account can quickly help an individual’s financial status as there is a limit on the number of transactions they can make with the account.

3. Generally, a saving account offers an interest rate which is slightly higher than the inflation rate for keeping the value of money stable.

4. Any unexpected situation that requires immediate funding can be dealt with if an individual has the account intact.

5. Financial institutions and banks have also customised the account depending on the specific types of usage.

Online saving account opening at the same bank as an individual’s primary account can provide many benefits, and it can be convenient for them. As transfers between accounts within the same bank or financial institution become convenient. A lot of banks also allow an individual to open more than one saving account that can be handy if they want to keep track of their savings.

All You Need to Know About A Pension Account

Savings account is the most basic type of bank account that banks offer. This account offers interest income along with moderate liquidity as well as a safe avenue to park funds.

Banks offer customised saving account for different types of customers. One type of saving account that they offer is called a pension account. This account is a special one for pensioners to receive credits for their pensions from their companies or from pension funds.

This account can be opened by:

• A Central Government or Civil Ministry employee who is covered under the Central Government Civil Pension Scheme. This scheme is operated by Central Pension Accounting Office, Department of Expenditure and Ministry of Finance
• Defence employees under Ministry of Defence (Army, Navy, Air Force) covered under Defence Pension Scheme of the respective Pension Sanctioning Unit i.e any retired or retiring Officer or Defence Civilian
• Employees working in an organization with 20 employees or more that is covered by Employees Pension Scheme.
• Existing members of ‘Members of Employees’ Family pension scheme.

A pension account is a zero-balance saving account. This means that the pensioner does not need to maintain any minimum balance in the account. The entire pension amount can be withdrawn without any fear of penalties. Generally, for a regular savings account, each bank has some minimum balance requirement. If this is not met, banks debit a certain penalty from the account. However, there is no such condition for a pension account.

Most banks provide regular saving account benefits to this account such as free cheque book, net banking and mobile banking apps, free ATM cum debit card. They also pay some amount of interest on the pension balance. It can be used to make bill payments as well.

The pensioner will need to submit the bank account details to the employer so that it can be added to the pension payment order. This PPO once filled will have to be submitted to the bank following which the pension will be collected. The bank will submit the request to the employer and pensions will get paid to the account every month.

However, this account can’t be opened at any time. It must be opened in the individual’s name after retirement or 6 months before retirement.

How to open a pension savings account?

It is possible to do zero balance account opening online. The account opening procedure is streamlined and once you fill up a form, the bank’s customer care executive will contact you to get your documents collected.

It is very easy to open zero balance saving account offline as well. You will need to go to the bank branch and fill up an account opening form and provide the required documentation. Once this application is processed, the bank account will be opened.

Documents required for a pension savings account

• Passport size photos
• Address proof (Passport, Aadhar card, Voter ID, Driving Licence, Electricity bill, Telephone bill, Gas bill, Lease rental papers, Purchase Documents, Home loan, Ration card)
• Identity proof (PAN card, passport, Aadhar card, Voter ID, Driving License)

This account can be opened in an individual name or jointly with the spouse. It is very easy to operate this zero-balance saving account and it can help the pensioners manage their funds post retirement.

5 Things You Must Know About NRO Fixed Deposits

One of the best ways in which you can make your money work for you, while keeping your investment secure, is to create a fixed deposit. This conventional type of investment allows you to earn an interest rate higher than what you would earn if your savings were parked in a regular savings account. FDs can be opened by both, Resident Indians as well as Non Resident Indians or NRIs. NRIs can open create three types of fixed deposits – Non Resident External Rupee deposit, Non Resident Ordinary Rupee deposit and Foreign Currency Non Repatriable deposits. This article is about NRO FDs.

1. What is NRO account and FD?

An NRO account is ideal for NRIs who have moved abroad but still have dependants or income sources in India. You can continue to manage your finances in India through your NRO account and, when you have deposited enough sums in this account, you can open an NRO FD. As such, the sums you earn form your investments in India – be it through share market investments, rent earned from properties leased or inheritance can be invested by creating an FD. This allows you to earn a higher amount on your existing investments.

2. You may repatriate the interest earned on deposits

Whether you maintain the sums in your NRO account or create an FD out of it, there are certain rules you must adhere to, with regards to repatriation. In case of NRO FD account, you may repatriate only the interest earned on your deposits (while you are abroad) and transfer the interest amount to your offshore account. The principal amount may not be repatriated to your foreign account.

3. The interest rate you can earn

When it comes to this type of NRI fixed deposit, the interest you earn on your deposit is typically the same as that offered to resident Indians. This is because the NRO account is essentially an INR account, from which you can repatriate sums i.e. the principal amount deposited, only when you are in India.

4. The interest you earn is taxable

The interest you earn on your NRO fixed deposits is taxable in accordance with the Income Tax Act of India, 1961. This is because the sums parked in the NRO account are sums earned from your investments in India. As such, you need to comply with the taxation laws of India. The tax levied on this FD for NRIs is quite high too. You need to pay 30% interest along with the applicable surcharges and cess taxes. If the interest earned in a financial year exceeds ₹1,000,000; you need to pay an additional surcharge of 10%.

5. Investment term and premature withdrawal

Both NRO and NRE FDs can be opened for a minimum period of 7 days and a maximum period of 10 years. You may also withdraw the deposits prematurely, before the term ends. However, the terms of premature withdrawal may differ from one bank to another. While some banks charge a penalty of 1% on the interest earned for premature withdrawals, other banks may not levy any penalties if you’ve maintained your FD for a minimum period of 1 year.

Final word: One of the greatest drawbacks of the NRO deposit is that you cannot repatriate the principal amount to your foreign account. The interest levied is also quite high. As such, it is better to consider the other NRI FDs. The FCNR Deposit is the best type of NRI deposit as you do not have to worry about currency fluctuations.

Equity Funds – The Features And Benefits Of Investing In This Mutual Fund

If you like to invest in the share market, there is a good chance that at one point or another; you would have invested in mutual funds. Mutual funds allow you to diversify your investment portfolio and also help you earn additional income. An equity fund is one such mutual fund that is best known as a ‘high-risk high-reward fund’. This fund provides capital appreciation over various investment tenures – short, medium and long. Here are the main features and benefits of investing in equity based mutual funds.

1. Equity based funds are regulated by SEBI

The Securities and Exchange Board of India or SEBI serves as the chief regulator of all types of mutual fund investments, including equity linked mutual funds. This regulatory body has mandated all fund houses to disclose their month-end portfolios on their respective websites, while also mentioning the periodic expense ratios and net Asset Value or NAV daily. This backing by SEBI makes your investment safe. Furthermore, you can get this information on investment advisory platforms, which provide portfolio analysis and performance reports, enabling you, the investor to make informed decisions.

2. You can diversify your investment portfolio

There are several different types of equity mutual funds in which you can invest. The categorisation of these funds is done on the basis of market capitalisation, themes, sectors, and the investment style of the fund manager. This diverse characteristic of the fund allows you, to choose from different funds to invest in. Diversifying your investment portfolio also allows you to mitigate the risks associated with investing in a single fund.

3. You can invest in lump sum or through SIP

One of the most prominent features of equity mutual funds is that investments can be done in lump sums. It is just as easy to invest through a Systematic Investment Plan or SIP. SIPs are ideal for young investors who cannot afford to invest large sums of money, in one shot. Moreover, these investments inculcate discipline when it comes to investments, since you have to invest a fix amount each month. In fact, you can invest as little as ₹500 per month through SIP.

4. The fund is managed by professional fund managers

The great thing about investing in equity oriented funds is that you do not have to do any research or analysis before investing. These funds are managed by professional fund managers with years of experience under their belts. Such managers can predict market movements and are well aware of how it functions. As such, buying and selling decisions are taken by fund managers, so that your investment objectives and financial goals may be achieved.

5. Equity based funds are tax efficient

Equity funds are also known to be some of the most tax-efficient funds. When you invest in this mutual fund, you do not have to worry about paying capital gains taxes to your fund house, irrespective of how often fund units are purchased or sold by fund managers. You can simply pay the capital gains tax on an individual level.
Final word: Equity savings schemes are widely considered as risky investments so you must assess your risk appetites and your preferred investment tenures before investing. However, investing in equity based funds can prove to be highly beneficial. Just ensure make informed investment decisions. Remember to check the reputation of the fund manager as this individual holds the key to your investment. A good manager can indeed help you earn high returns on your investments.