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Understanding NRE Account: A Step-by-Step Guide for NRIs

Created on 24 Feb 2023

Wraps up in 11 Min

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Updated on 28 Mar 2023

Calling all Non-Resident Indians (NRIs)! Are you ready to take your financial management to the next level? Say hello to the ultimate banking solution for NRIs - NRE Accounts! It's time to wave goodbye to the hassle of managing your finances from abroad and say hello to the convenience and flexibility of NRE Accounts.

Get ready to explore the fascinating world of NRE Accounts, where you can save and invest in Indian Rupees with ease. Whether you're looking to deposit your foreign earnings, invest in the Indian market, or simply manage your finances from anywhere in the world, NRE Accounts have got you covered.

But that's not all - NRE Accounts offer a wide range of benefits, including tax exemptions, attractive interest rates, and the ability to repatriate your funds in foreign currency freely. Plus, with the Reserve Bank of India's (RBI) regulations ensuring the safety and security of your funds, you can rest assured that your finances are in good hands.

So, grab your favorite snack and get ready to dive into the exciting world of NRE Accounts. In this article, we'll cover everything you need to know about NRE Accounts, including how to open one, their features and benefits, and how they can help you manage your finances effectively. Are you ready to take the first step towards financial independence? Let's get started!

What is an NRE account?

If you're an Indian citizen living abroad, you may have heard about Non-Resident External (NRE) accounts. These bank accounts allow you to deposit your foreign earnings in India and earn interest in Indian Rupees. Plus, the best part is that the interest earned on NRE accounts is completely tax-free!

NRE accounts can be a savings account, current account, recurring deposit or fixed deposit account. They can be opened individually or jointly with another NRI. This means you can easily manage your finances in India, even if you're living in a different country.

One of the great advantages of NRE accounts is their liquidity. You can quickly and fully repatriate the money from these accounts to your country of residence without any hassle. Plus, you can operate your account from anywhere worldwide using net banking facilities and international debit cards.

For example, let's say you are an Indian citizen living in the United States and want to send money to your family in India. Instead of sending US dollars, which would need to be converted to Rupees and could incur fees, you can deposit the money into an NRE account in India, and your family can access it in Rupees.

But it's important to remember that only earnings outside India can be deposited into NRE accounts. Domestic earnings (Indian income) cannot be deposited. 

Also, NRE accounts are exposed to exchange rate fluctuations, meaning there's a chance you may withdraw more or less than your initial deposit amount due to changes in the Rupee's value.

Investing in India is made easier with an NRE account. For instance, NRIs who want to invest in mutual funds in India can do so using their NRE account. You can also use this account for carrying out investments, business, and personal banking in India.

So, if you're an Indian living abroad and want to manage your finances back home, an NRE account might be the way to go! It's a great way to stay connected with your home country while earning interest on your hard-earned money.

NRE Account Features: A Must-Read for NRIs

Imagine being able to earn tax-free income on your hard-earned money while enjoying the convenience of managing your finances from anywhere in the world. That's the power of an NRE account, and it's no wonder that it's become such a popular choice among non-resident Indians. Here are some amazing features that make NRE accounts the go-to option for NRIs who want the best of both worlds.

1. Currency: NRE accounts are bank accounts in India that are denominated in Indian Rupees. This means you can easily manage your finances in India while living abroad without worrying about currency exchange rates or fees.

2. Deposit: NRIs can deposit their foreign currency earnings into their NRE accounts. This includes income earned from employment or business activities outside India and funds from family and friends abroad. However, you cannot deposit Indian income earned in India into an NRE account.

3. Taxation: The interest earned on an NRE account is completely tax-free in India, which can be a significant advantage for NRIs. This means you won't have to pay any taxes on the interest earned on your NRE account, which can increase your overall returns.

4. Repatriation: NRIs can easily and quickly transfer funds from their NRE accounts to their country of residence. This includes both the principal amount and the interest earned on the account. You can transfer funds from your NRE account to any account held in your name outside India or to any other NRE account.

5. Joint account: NRIs can open joint NRE accounts with another NRI. This can be helpful if you want to share financial responsibilities with a family member or friend. However, if you want to open a joint NRE account, it can only be done with another NRI and not with a resident Indian.

6. Operations: NRIs can easily operate their NRE accounts from anywhere in the world through internet banking, mobile banking, or by visiting an Indian bank branch. This means you can manage your finances in India from the comfort of your home abroad.

7. Investments: With an NRE account, you can easily invest in mutual funds, stocks, and real estate in India. This can be a great way to earn investment returns and participate in the Indian economy.

8. Flexibility: NRE accounts offer a lot of flexibility when it comes to managing your finances. You can choose from a variety of account types, such as savings accounts, current accounts, and fixed deposits, depending on your financial needs.

9. Nomination facility: NRIs can nominate a family member or friend as a nominee for their NRE account. This ensures that in case of the account holder's death, the funds in the account will be transferred to the nominee without any legal hassles.

Navigating the Rules of NRE Accounts: Tips for NRIs

An NRE (Non-Resident External) account is a bank account that Non-Resident Indians can maintain (NRIs) and Persons of Indian Origin (PIOs) to manage their finances in India. Here are some key rules governing NRE accounts:

  • Only NRIs and PIOs are eligible to open an NRE account.
  • NRE accounts can be opened in Indian rupees or in a foreign currency, like USD or GBP.
  • The funds in an NRE account are freely repatriable, meaning they can be transferred abroad without any restrictions.
  • NRE accounts can be jointly held with another NRI/PIO, but not with a resident Indian.
  • Interest earned on NRE account deposits is tax-free in India.
  • Funds in an NRE account can be used for making investments in India, including in stocks, mutual funds, and real estate.
  • The minimum balance requirements for an NRE account vary by bank, but are generally higher than those for regular savings accounts.
  • NRE accounts come with a range of banking services, including online banking, debit cards, and chequebooks.

*Note* It's important to note that these rules are subject to change and may vary slightly from bank to bank. It's always a good idea to consult with your bank and a financial advisor to ensure that you understand all the rules and regulations related to NRE accounts.

NRE Account Eligibility Criteria for NRIs: Everything You Need to Know

An NRE (Non-Resident External) account is a bank account in India that is primarily designed for NRIs (Non-Resident Indians). Here are the eligibility criteria for opening an NRE account:

1. NRI Status: To open an NRE account, you must be an NRI. According to the Indian Income Tax Act, an individual is considered an NRI if he or she has spent less than 182 days in India in a financial year or has stayed in India for less than 60 days in the previous year and less than 365 days in the past four years.

2. Foreign Currency Earnings: NRIs can deposit foreign currency earnings into their NRE account. This includes income earned from employment or business activities outside India and funds from family and friends abroad. However, NRIs cannot deposit Indian income earned in India into an NRE account.

3. Proof of NRI Status: To open an NRE account, NRIs must provide proof of their NRI status. This can be done by providing a valid passport, visa, or other relevant documents that prove their non-resident status.

4. Joint Account: NRIs can open a joint NRE account with another NRI. However, it is important to note that joint NRE accounts cannot be opened with a resident Indian.

5. Minimum Age: NRIs must be at least 18 years old to open an NRE account.

6. KYC Documents: To open an NRE account, NRIs must provide Know Your Customer (KYC) documents, including a passport, visa, proof of address, and passport-sized photographs.

By meeting the eligibility criteria mentioned above, NRIs can easily open an NRE account and take advantage of its various benefits, such as tax-free interest and easy repatriation of funds.

Who should open NRE Account?

NRE accounts are ideal for Non-Resident Indians (NRIs) who want to maintain their financial ties with India. They are also a good choice for those who want to invest in India, as they offer various investment options, including mutual funds, stocks, and real estate. NRIs with foreign currency earnings can benefit from the tax-free interest earned on their NRE accounts. Additionally, those with family members in India who they want to support financially can benefit from opening an NRE account. 

How can one open an NRE account?

Are you planning to manage your finances in India while living abroad? Look no further! Here's a step-by-step guide to opening an NRE (Non-Resident External) account with a bank of your choice:

  1. Choose a bank that offers NRE accounts. With most major Indian banks offering this service, you have plenty of options to choose from.
  2. Gather the required documents, including a valid passport, visa, and overseas address proof. Depending on the bank, you may also need to provide additional documents like a tax residency certificate.
  3. Submit your application online or visit a bank branch to apply in person. If you opt for the online route, simply upload scanned copies of your documents. If you prefer to apply in person, bring your original documents along.
  4. Once your account is opened, you can fund it by transferring money from your foreign bank account. Wire transfer and online banking are two common options.
  5. Start using your NRE account to manage your finances in India with ease. You can make transactions, investments and manage your account via online banking or by visiting an Indian bank branch.

So, whether you're sending money to family or investing in the Indian market, opening an NRE account is a hassle-free way to manage your finances in India. Get started today!

*Note* It is important to note that different banks may have slightly different procedures for opening an NRE account. It is recommended to check with the bank of your choice for their specific requirements and process.

Get the Best Returns: Top Banks for NRE Savings Accounts.

As an NRI, your savings matter, and choosing the right bank for your NRE account can make all the difference. To help you out, we've compiled a list of the best banks in India that offer NRE Savings accounts with attractive interest rates. Take a look at the top contenders for your money!
Enjoy high-interest rates and effortless banking, no matter where you are in the world. Check out the list of the top banks in India that offer NRE accounts and get the most out of your hard-earned savings!

Name of the Banks

NRE Deposit Interest rates below ₹ 2 Crore

Minimum Balance Requirement

 

1 year

2 years

3 years

5 years

 

Axis Bank

6.75%

7.26%

7%

7%

₹10,000 or ₹25,000. Depending on the selected account.

Bank of Baroda

6.75%

6.75%

6.25%

6.25%

₹50,000 average quarter balance

Bank of India

6 %

6.75%

6.50%

6%

₹200 per quarter

HDFC Bank

6.60%

7%

7%

7%

₹10,000 (Urban city branch) and ₹5,000 (rural city branch)

ICICI Bank

6.60%

7 %

7%

6.90%

₹10,000

Kotak Mahindra Bank

7%

6.75%

6.50%

6.20%

₹10,000

State Bank of India

6.80%

7%

6.50%

6.50%

₹1,00,000 (Urban city branch) and ₹50,000 (rural city branch)

Yes Bank

7.25%

7.50%

7.50%

7%

₹10,000

 

Key Features of these NRE Bank Account

Some special features of top NRE savings bank account.

Axis Bank NRE Account

  • Maintain an average minimum balance of ₹10,000.
  • Enjoy NRE deposit rates starting from 6.75% for 1 year.
  • Operate the account jointly with an Indian resident.
  • Conveniently manage your account through net banking.
  • Get access to a range of banking services, including international debit cards.

Bank of Baroda NRE Account

  • Keep your money safe and secure with Bank of Baroda's NRE Account.
  • Enjoy attractive NRE deposit rates starting from 6.75% for 1 year.
  • Benefit from tax exemption on the interest earned on NRE income.
  • Conveniently manage your account with 24-hour net banking facilities.
  • Maintain an average minimum balance of ₹50,000 per quarter to keep your account active.

Bank of India NRE Account

  • Offers competitive NRE deposit rates starting from 6% for 1 year.
  • Average quarterly balance requirement of ₹200
  • Allows easy management of funds through net banking

HDFC Bank NRE Account

  • Bank with India's premier financial institution, HDFC Bank.
  • Choose from urban and rural account options with an average minimum balance of ₹10,000 and ₹5,000, respectively.
  • Enjoy competitive NRE deposit rates starting from 6.60% for 1 year.
  • Conveniently access your account with internet banking facilities and international debit cards.
  • Get full repatriability of funds with tax exemption on NRE income.

ICICI Bank NRE Account

  • Open your NRE Account with India's leading private sector bank, ICICI Bank.
  • Maintain an average minimum balance of just ₹10,000 to keep your account active.
  • Benefit from competitive NRE deposit rates starting from 6.60% for 1 year.
  • Enjoy tax exemption and full repatriability of funds in India.
  • Conveniently manage your account online with internet banking facilities.

Kotak Mahindra Bank NRE Account

  • Bank with one of India's fastest-growing banks, Kotak Mahindra Bank.
  • Maintain an average minimum balance of just ₹10,000 monthly to keep your account active.
  • Enjoy competitive NRE deposit rates starting from 7% for 1 year.
  • Conveniently manage your account with internet banking and home banking facilities.
  • Jointly open an account with NRIs and PIOs.

State Bank of India NRE Account

  • Experience banking at its best with India's largest public sector bank, State Bank of India.
  • Choose from urban and rural account options with an average minimum balance of ₹1,00,000 and ₹50,000, respectively.
  • Enjoy attractive NRE deposit rates starting from 6.8% for 1 year.
  • Conveniently access your account with internet banking facilities and international debit cards.
  • Keep your money safe and secure with SBI's trusted banking services.

Yes Bank NRE Account

  • Bank with India's fourth-largest private sector bank, Yes Bank.
  • Maintain an average balance of just ₹10,000 to keep your NRE Account active.
  • Enjoy attractive NRE deposit rates starting from 7.25% for 1 year.
  • Conveniently access your account with internet banking facilities.
  • Get personalised assistance with a dedicated relationship manager assigned to you.

The Bottom Line

Opening an NRE account can be a great financial move for Non-Resident Indians looking to invest their money in India. With competitive interest rates and flexible options for managing your account, the top banks for NRE accounts offer a host of features that can make your banking experience seamless and hassle-free. So, whether you're looking to save for the future, send money back home, or invest in the Indian market, an NRE account can help you achieve your financial goals. So why wait? Open an NRE account today and start your journey towards financial prosperity!

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Divyanshu did his post-graduation in Financial Economics, and that's when he realized that writing about finance interests him the most. He has been writing finance content for two years and considers himself a coherent and confident writer. As a Finance content writer, he reads a lot about the subject and makes sure he is up to date with the latest updates in the market. Besides that, he is passionate about fitness and works hard to maintain a healthy lifestyle.

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