NRI remittances: Why You Must Choose NRI Savings Accounts?
Created on 30 Jan 2024
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Around $112.6 billion (about ₹9,34,580 crore) was sent by inward foreign remittance in 2023, a solid 26% rise from the past five years. This inward remittance helps fatten up the foreign exchange reserves, hence boosting the nation’s economy.
Interestingly, India is the highest receiver of remittance in the world, with an average of $90 billion (over ₹7,47,000 crore) every year. Countries like the US, UAE, UK, Singapore, Saudi Arabia, Kuwait, Oman, Qatar, Hong Kong, and Australia contribute the most to India’s inward remittances.
These inward remittances help forex reserves fund the nation’s imports, pay off government debt, and contribute to strengthening the Indian currency. Now, there are different channels to pay off remittances; NRI savings accounts offer a simple option along with many other benefits.
In this article, we will uncover the many unseen aspects of NRI remittances and NRI savings accounts. But first, let’s discuss the reasons why NRIs turn towards utilising remittances.
Reasons Remittances are Utilised by NRIs
The requirements for NRIs remittances are many. Some of the most generic ones are listed below:
a. Investments: India is a faster-growing economy, 3rd largest in Asia, compared to developed nations. So, it presents a lucrative investment opportunity to NRIs, be it through stocks or real estate.
b. Family maintenance: A common reason for NRI remittances is to support the family residing in India. NRIs regularly send money to their families for children’s education, domestic needs, or other costs.
c. Emergencies: Medical emergencies or any unplanned financial requirement in India can be met by NRIs through remittances.
d. Overseas education: A popular reason for sending money abroad is to support the loved ones studying abroad financially. A higher education degree from an overseas institute is a common preference among Indian students.
e. International trade and business: Import and export accounts for the big-ticket remittances to and from India.
Importance of NRI Remittance in the Economy
NRI remittances are like a steady stream of fuel powering India's economic engine. These valuable inflows play a significant role in boosting various aspects of the Indian economy. Some of these are as follows:
1. Foreign Exchange Reserves:
As mentioned earlier, NRI remittances contribute significantly to India's foreign exchange reserves. This foreign currency collection ($112.1 billion in 2023) ensures stability in the exchange rate, making imports cheaper and attracting foreign investment.
2. Current Account Deficit (CAD) Reduction:
NRI funds help narrow India's Current Account Deficit (CAD). By plugging this gap, countries decrease dependency on external borrowings and stabilise their external finances. However, a rising CAD doesn’t necessarily mean detrimental economic conditions, as there could be geographical and other reasons for import.
3. Private Consumption and Investment:
A sizable portion of remittances are used by families in India for consumption, boosting demand for goods and services. This increased demand stimulates growth across various sectors, from agriculture and manufacturing to retail and services. Additionally, some NRIs invest their remittances in businesses or property in India, further fueling economic activity.
4. Financial Inclusion:
Increased access to remittances encourages financial inclusion in rural areas. By opening bank accounts and using digital payment services, families gain access to formal financial services, empowering them and boosting financial literacy.
Why NRI Use NRI Savings Accounts?
Sending money back home to India can feel as confusing as navigating a maze. But fear not NRIs! Choosing the right NRI savings account can be your secret weapon for secure, convenient, and potentially lucrative remittances. They are more efficient for both sending and receiving money from India for NRIs.
a. Sending Money to India:
You can transfer your overseas income to your NRE (Non-Resident External) account in India easily.
IDFC FIRST Bank NRE and NRO Savings Account customers can carry out NRI remittances conveniently and with full bank personnel assistance. There are several other reasons why sending money to your IDFC FIRST Bank NRE and NRO Savings Account is beneficial.
- Tax benefit: The interest earned on remittances made to the NRE account is exempt from tax.
- Interest income: Your IDFC FIRST Bank NRE and NRO Savings Account interest is calculated on the daily balance and credited monthly.
- Free transfer: You can transfer funds from your IDFC FIRST Bank NRE Savings Account 24/7 and at a Zero processing fee.
b. Receiving Money from India:
For people wishing to send money from India to their foreign accounts, there is no limit to making an International Fund Transfer from an NRE account. You can transfer money from your NRE Account to an overseas account online.
Whereas sending money from an NRO account to an overseas account when the source of funds is Current Income (e.g. Rent, Dividend, Interest, etc.), then there is no limit. But, when the source of funds is Capital Income (e.g. Sale of Property), then it is $1 million (over ₹830 lakh) in a fiscal year.
Benefits of Using NRI Accounts
Here's why NRI savings accounts are must-haves for sending money back home:
1. Streamlined Remittances:
Say goodbye to the hassle of money orders and wire transfers. NRI accounts allow you to send and receive funds electronically, making the process faster, cheaper, and more reliable.
NRIs can even open joint accounts with resident Indians, facilitating easy financial transactions.
2. Tax Advantages:
Certain NRI accounts, like NRE, NRO (Non-Resident Ordinary Account) and FCNR (B) (Foreign Currency Non-Resident (B)), offer tax benefits. Interest earned on these accounts is exempt from Indian income tax, making your hard-earned money work harder for you.
3. Regulatory Compliance:
NRI savings accounts are designed to comply with the regulations set by the Reserve Bank of India (RBI) for managing the financial affairs of NRIs. These accounts ensure that NRIs adhere to the guidelines set by Indian regulatory authorities.
IDFC FIRST Bank ensures that all NRI remittances are carried out with full RBI and FEMA compliance.
4. Investment Options:
Some NRI accounts allow you to invest in Indian assets like mutual funds and bonds directly from your account. This simplifies the process of building your wealth in India while you're abroad.
5. Repatriation Freedom:
NRE accounts allow you to repatriate both principal and interest earned freely, giving you complete control over your money. FCNR (B) accounts offer limited repatriation on the principal amount but unrestricted access to interest. This means that NRIs can transfer their income earned in India and the interest earned on their investments back to their country of residence.
6. Family Support:
NRI savings accounts facilitate easy transfers to family members in India. You can set up standing orders or automatic transfers to ensure your loved ones receive their funds seamlessly.
7. Customised Solutions:
Different banks offer NRI savings accounts with varying features and benefits to suit your specific needs. Choose one that aligns with your remittance frequency, investment goals, and desired level of flexibility.
8. Competitive Interest Rates:
NRI savings accounts often offer higher interest rates than regular Indian savings accounts. This means you earn more on your remittances, helping your money grow while it helps your loved ones back home.
9. Currency Options:
NRI savings accounts often offer the flexibility to hold funds in different currencies. This feature benefits NRIs as they can hold their funds in the currency of their choice, reducing the impact of currency fluctuations.
10. Banking Services Tailored for NRIs:
Banks often provide special services and facilities for NRIs, such as dedicated customer support for international clients, online banking, and other features that cater to the specific needs of non-resident account holders. IDFC FIRST Bank specialises in this regard profoundly.
The Bottom Line
Remember, choosing the right NRI account is crucial for maximising your remittance benefits. Do your research, compare options, and find one that fits your financial goals like a glove.
Keeping the requirements of NRIs in mind, IDFC FIRST Bank provides you uninterrupted access to your funds and a host of premium features. With a dedicated relationship manager, all your NRI remittances made through IDFC FIRST Bank NRI Savings Accounts can be completed remotely and seamlessly!
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