Bank Accounts Details

All about Non-Resident External (NRE) Account and Non-Resident Ordinary (NRO) Account

Opportunities for NRIs to open accounts:-The government gives non-resident Indians (NRI) the opportunity to open rupee-dominated accounts in India for repatriating funds. The most popular among these are the NRE and NRO accounts.

Simply put, an NRE (non-resident external) accounts gives an individual the opportunity to deposit money earned from abroad.
It can be either in the form of a savings or current or term deposit account. Apart from the account holder, a resident can also operate the NRE account for making local payments as long as he has the power of attorney.

Privilege of NRO account: - Meanwhile, an NRO (non-resident ordinary) account gives one the privilege of depositing overseas earnings as well as Indian earnings. An NRO account can be in the form of saving, current and term deposit account.

However, one can have a resident of India as a joint account holder. Income arising in foreign currency, remittances received through proper banking channel or from NRE account and any past dues from India can be deposited in this account.
But money once deposited in this account can only be withdrawn for local payments including investments.

How do you open an NRE or NRO account?

The process is similar for both accounts. To open an NRO or NRE account, one has to make a request with an authorised bank.
One is then is required to submit documents like utility bill, driving licence, resident permit, rent received, passport and overseas or Indian bank statement.
Also, the minimum fund has to be remitted to India either as forex remittance and transfer from existing NRE account.

Comparison with Differences between NRE and NRO accounts

	Non-Resident External (NRE) Account	Non-Resident Ordinary (NRO) Account
Currency	Rupee denominated	Rupee denominated
Regulation	Foreign Exchange Management (Deposit) Regulations 2000	Foreign Exchange Management (Deposit) Regulations 2000
Type	Savings, Current, recurring or a {Fixed / Term Deposit with min. 1 year or maximum 3 yr period)	Savings, Current or a Fixed / Term Deposit
Foreign National	Can not open	Can open such account but with funds remitted from outside income
Who can open?	NRI	NRI, Resident before becoming an NRI
Whether RBI Approval required	Only in the case of individual & entities of Bangladesh/Pakistan nationality.	Only in the case of individual & entities of Bangladesh/Pakistan nationality.
Is repatriation allowed?	Yes	Current Income is freely repatriable with a CA certificate that taxes have been paid on such incomes but principal amount is restricted to USD 1 million per financial year except citizen of certain countries.
Repatriation to Nominee NRI	Permitted in case of death of the account holder	Permitted in case of death of the account holder
What can be the source of funds?	Funds remitted from abroad, Funds from another NRE / FCNR account	Funds received from within India
Can funds be transferred to another account?	Funds can be transferred from an NRE account to an NRO / NRE / Resident account	Funds can be transferred from an NRO account to an NRO / Resident account
Can it be opened jointly with an NRI?	Yes	Yes as well with Resident
Whether addition or deletion of name permitted	Yes	Yes
Can it be opened jointly with a resident?	No	Yes
What is the income tax treatment of the interest earned?	Tax free	Taxable u/s 115C and TDS @ 20% would be applicable.
Can power of attorney holder open the account?	No	No
Can power of attorney holder operate the account?	Yes, can make local rupee payments but can not gift on behalf of NR or transfer funds to another NRE account.	Yes, can make local rupee payments but can not gift on behalf of NR or transfer funds to another NRO account.
Is nomination allowed?	Yes for Individuals	Yes for individuals
What is the status of the account when NRI returns to India for good?	Converted to resident account	Converted to resident account
Disadvantage	If rupee depreciates, the saving in terms of USD depreciates.	If rupee depreciates, the saving in terms of USD depreciates.
Loan against security of NRE Account	Permitted subject to certain limitations.upto 100 lacs	Permitted as per normal terms and conditions of resident account holders