All about NRI Bank Accounts: NRO, NRE and FCNR

Mint

24-07-2025

For many Indians living and earning abroad, there is often a need to convert their overseas earnings (in foreign currencies) into Indian rupees to support their family back home or invest in assets in India. This article explains the key types of NRI account and helps you decide which one best suit your needs.
A Non-Resident Ordinary (NRO) savings account is a type of NRI account which helps to manage NRI's income earned in India. This account accepts deposits in both Indian Rupee and foreign currency and withdrawals are available only in Indian Rupees.
An NRO savings account can be operated not only by the NRI account holder but also jointly with a resident Indian or through a Power of Attorney (POA), allowing the resident to carry out permitted transactions on their behalf.
Interest earnings in an NRO account are taxable at 30% under the Income Tax Act, 1961.
Non-Resident External (NRE) savings account is held by NRIs, Persons of Indian Origin (PIOs), and Overseas Citizens of India (OCIs). This allows NRIs to deposit and manage their foreign earnings in India, typically in Indian Rupees.
Funds held in an NRE savings account are maintained in Indian Rupees, allowing NRIs to conveniently manage their overseas income within India. Additionally, the interest earned on these accounts is fully exempt from income tax in India.
Any foreign currency remitted to an NRE account is automatically converted to Indian Rupees.
An FCNR deposit account is a fixed deposit which is maintained in a foreign currency. This enables NRIs to earn tax-free interest in that same currency. NRI can maintain deposits in foreign currency to avoid exchange rate risks. Both principal and interest earned in an FCNR account are fully repatriated without any restrictions.
The FCNR deposits offers NRIs to grow their funds tax-free which makes it a more preferred option with flexible tenure and competitive interest rates. Deposits made with FCNR may be pledged as loan collateral.
NRIs need a designated bank account in India to manage their earnings and investments effectively. Compliance with FEMA : NRIs are required to hold specific bank accounts such as NRE, NRO, or FCNR accounts to manage income and assets in India in accordance with regulations.
: NRIs are required to hold specific bank accounts such as NRE, NRO, or FCNR accounts to manage income and assets in India in accordance with regulations. Repatriation of Funds : NRIs can transfer funds back to their country of residence from NRE and FCNR accounts, including both principal and interest earned, without any tax implications.
: NRIs can transfer funds back to their country of residence from NRE and FCNR accounts, including both principal and interest earned, without any tax implications. Currency Management : FCNR account lets NRIs hold funds in foreign currencies which ensures their savings is not affected by exchange rate fluctuations.
: FCNR account lets NRIs hold funds in foreign currencies which ensures their savings is not affected by exchange rate fluctuations. Investment Opportunities : NRI accounts facilitate investments in various Indian financial instruments such as stocks, mutual funds, and real estate.
: NRI accounts facilitate investments in various Indian financial instruments such as stocks, mutual funds, and real estate. Tax Benefits: Interest earned in FCNR and NRE savings account is tax-exempted in India.
If you're a Non-Resident Indian (NRI) looking for ways to handle your financial matters in India, opening an NRO, NRE, or FCNR account is a straightforward process. Step 1: Check Your Eligibility
To open an NRI account, you must fall into one of the following categories: Indian citizens who are living abroad for employment, business, or studying.
Overseas Citizens of India (OCI) or Persons of Indian Origin (PIO).
2. Step 2: Choose the Right Account Type
The right NRI account depends on where your income is generated, whether you need full repatriation, your tax preferences, and the currency you wish to hold your funds in.
3. Step 3: Keep These Documents Ready
Most banks would require the following: Valid passport Visa or residency permit Proof of overseas address PAN Card or Form 60 Recent passport size photo
4. Step 4: Apply Online or Visit a Branch
Most banks now allow you to conduct a fully digital account opening process. Alternatively, you can go to a bank branch located either in India or abroad.
Determine whether your income is earned in India or overseas before you open an NRI account online. Next, consider whether you need to lower your Indian tax burden, save in Indian or foreign currency, or transfer funds back to your foreign account. Your choice should be in line with your preferred currency, source of income, and degree of access to your money.
To effectively manage your finances as an NRI, you must comprehend the distinctions between NRO, NRE, and FCNR accounts. You can simplify money transfers, lower your tax obligation, and maintain compliance with the correct account.
Before opening an NRI account online that fits your financial objectives both in India and overseas, carefully consider your income source, repatriation requirements, and preferred currency.
Note to readers: This article is part of Mint's paid consumer connect Initiative. Mint assumes no editorial involvement or responsibility for errors, omissions, or content accuracy.
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