Non-Resident Indians (NRIs) constantly look for the right NRI savings account to deposit their savings and receive desired benefits. Banks in India usually offer three types of NRI accounts – NRO (Non-Resident Ordinary) accounts, FCNR (Foreign Currency (Non-Resident) accounts and NRE (Non-Resident External) accounts. This article explains the meaning of an NRE account and enlists its features and benefits.
What are Non-Resident External (NRE) accounts?
An NRE account helps NRIs deposit their savings in foreign currencies. Those with an NRE account can deposit money in a foreign denomination and withdraw in INR (Indian Rupees) only.
Features of NRE accounts
Let us now understand the features of NRE accounts, including their eligibility criteria, denomination-related criteria, and other features. Here is a summary of these features:
- Only NRIs are eligible – Customers must be Non-Resident Indians to open an NRE account. Applicants who wish to open an NRE account must be Non-Resident Indians.
- NRIs can open joint accounts – Like regular savings accounts in India, NRIs can open joint NRE savings accounts. However, both joint account holders must be NRIs.
- NRE accounts are rupee-denominated – An NRE savings account accepts international currencies but operates in INR only. If, for instance, an NRI deposits a certain sum as savings in Japanese Yen, the bank converts this amount into INR while depositing it in their account.
- Customers can repatriate their funds using an NRE account – NRIs can repatriate their savings from their NRE accounts. In this way, NRIs can transfer all their savings back to India using NRE accounts.
- The bank changes your bank account type if you return to India – The bank in question converts an NRI’s NRE account to a regular savings account when an NRI returns to India.
Benefits of choosing an NRE account as an NRI
The following are the benefits of an NRE account for NRIs:
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Tax benefits
The key benefit of opting for an NRE account is the tax exemption benefit. NRE accounts are tax-free, and the owner of an NRE account must not pay income tax, wealth tax, or gift tax in India.
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Easy fund repatriation
Another advantage is the ease of fund repatriation with NRE accounts. NRIs can better understand this benefit by comparing NRE accounts with NRO accounts. NRO accounts generally restrict customers from repatriating more than USD 1 million (₹ 82,640,400) in an assessment year. However, fund repatriation is free for NRE account holders.
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Joint accounts
Two NRIs can open a joint NRE account to manage their combined finances. It can also help them access their funds conveniently. Joint NRE accounts are especially suitable for non-working spouses living abroad with their partners.
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Instant withdrawals
You can use an international debit card and instantly withdraw money from your NRE account. IDFC FIRST Bank customers can access their NRE account via Internet banking or through IDFC FIRST Bank’s mobile app.
While NRE savings accounts differ from regular savings accounts, the procedure to follow while selecting them remains similar. One must check whether an NRE account offers a competitive interest rate and provides easy access to mobile banking services before applying.