NRE (Non Resident External) Accounts
Non Resident External (NRE) Accounts are opened for Non Resident Indians. A Non Resident Indian (NRI) is an Indian citizen or foreign national of Indian origin resident outside India for purposes of employment, carrying on business or vocation in circumstances as would indicate an intention to stay outside India for an indefinite period.
A person of Indian origin (PIO) is a citizen of any country other than Pakistan, Bangladesh or Sri Lanka, who
- At any time held an Indian Passport,
- He or any of his parents or grand parents was a citizen of India,
- Is a spouse of an Indian Citizen or a person referred to above.
Salient features of Non Resident External (NRE) Accounts
Persons of Indian nationality or origin residing abroad.
Accounts can be opened in single name or in joint names with another non resident Indian.
Duly filled in Account Opening form with
- Copy of the Passport
- Visa/residence permit
- Two copies of recent photographs
- Initial money remittance
Currency of account
Accounts are maintained in Indian Rupees.
Types of Account
Savings Bank, Current Account and Term / Fixed Deposit Accounts can be opened.
Credits in the account
Credits in the accounts can be made by:
- Depositing Foreign Currency Notes/Traveler Cheques
- Depositing cheques/instruments drawn in foreign currency
- Inward remittance in foreign currency or Indian Rupees from abroad
- Transfer from another NRE or FCNR account
The credits received in foreign currency are converted into Indian Rupees at the prevailing exchange rates.
Payments/Transfers from account
Payments/transfers from the accounts can be made by:
- Indian Rupees
- In foreign currency by converting Indian Rupees in foreign currency at the prevailing exchange rates.
The exchange risk of converting foreign currency into Indian Rupees and vice-versa is born by the depositor.
By account holder(s)
Account holder(s) can grant Power of Attorney and authorize resident Indian(s) to operate Savings or Current accounts.
Interest rate varies from bank to bank.
In case of term / fixed deposits, the interest may be paid either in lump sum at the time of maturity or it may be paid every quarter or every month as opted by the depositor.
Available. Nomination can also be made in favour of resident Indians.
Allowed from one branch of the issuing bank to another.
Allowed subject to some interest rate penalty.
Exempted from Indian Income Tax
The facility of auto renewal of deposits is available from banks.
Change of Status from Non-Resident to Resident
Immediately on return of the account holder to India and on his becoming resident in India, he is required to advise the bank. His NRE account will be redesignated as resident rupees account or converted to RFC (Resident Foreign Currency) account as per his option.
The fixed / term deposits shall continue to earn the earlier contracted Interest Rate till maturity.
The balances in NRE accounts are free of Wealth-tax.
The entire credit balance (inclusive of accrued interest) in an NRE account can be repatriated outside India at any time without reference to the Reserve Bank.
Loans/overdrafts are available from banks against security of deposits in NRE accounts.
Exchange risk is born by the depositors.
Investment from the account can be made in shares, debentures, mutual funds, money market mutual funds etc. The amount invested and income on that amount can be repatriated if the required conditions are fulfilled.
On return to India, the following amounts can be deposited in the RFC A/C -
- Balances in Bank accounts outside India and interest thereon.
- Dividend, interest, profit earned on investment in foreign currency in the form of shares or securities.
- Rent etc. earned from Immovable property outside India.
- Foreign exchange earning through employment, business or vocation outside India which was taken up while staying abroad.
- Other facilities like International Credit/Debit cards, On-line / Internet banking etc. are usually offered free by banks.
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