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The below content is purely for informational purposes and is not intended to constitute advisory of any kind. The position reflected in this article has been updated as of November 15, 2023.

 

As a Non-Resident Indian (NRI), you may want to transfer money back home to your family, continue with your investments, or meet banking needs in India. Indian banks offer you a variety of banking accounts to choose from as per your financial requirements. To open these accounts, you must be an NRI/Person of Indian Origin (PIO)/Overseas Citizen of India (OCI) as per the prevailing Foreign Exchange Management Act (FEMA) guidelines.

  • Non-Resident External (NRE), Non-Resident Ordinary (NRO) and Foreign Currency Non-Resident Bank (FCNR (B)) are three types of bank accounts/deposits offered to NRIs. 

  • These accounts facilitate seamless transfer and accessibility of funds within India and overseas.

In this article, you can learn more about the features, eligibility and critical differences between NRE, NRO, and FCNR (B) accounts to determine which one(s) best suit your financial requirements.

Open an NRI account

 

Outlining NRE, NRO and FCNR (B) bank accounts

NRE account: It is a type of bank account that you can open in India as an NRI. It is maintained in Indian Rupee (₹). You can use it to deposit funds you earn abroad in foreign currency. The bank uses the prevailing exchange rates to convert your foreign currency funds into Indian Rupees and deposits them into your account. The account suits those who want to use their foreign earnings to handle expenses in India. A key benefit of an NRE bank account is that you can freely repatriate, i.e., transfer the funds to overseas account without any limits. The repatriable funds include both the principal amount and the interest earned in this account. Furthermore, the interest earned on the money deposited in this account is tax-free in India. 

Open an NRE account

 

NRO account: It is yet another bank account that you as an NRI can open in India. It is a Rupee denominated account that you can use to deposit income earned in India such as rent, dividends, pensions, gifts and proceeds from the sale of immovable property received in India. The account is suitable for NRIs who want to use income earned in India to manage their expenses in the country.

Funds deposited in your NRO bank account can be classified as:

  • Current income: It includes rental income, dividends from investments, pension, interest from Fixed Deposits (FD) and bank accounts, among others. The funds from current income are freely repatriable without any limit.

  • Capital income: It includes proceeds from maturity of FD, sale of property, redemption of mutual funds, shares, fund transfers from your NRO account to NRE account. The interest earned in an NRO account is taxable in India. You can repatriate capital funds up to USD 1 million cumulatively per Financial Year (April–March) for all your NRO accounts held in India. Funds transfer from your NRO account to your NRE account also falls under the USD 1 million limit.

Open an NRO Account

FCNR (B) account: It lets you maintain a fixed deposit in India in foreign currency. Like an NRE bank account, the funds in this account and the interest earned are tax-free in India and are freely repatriable with no limits.

 

OPEN AN FCNR (B) ACCOUNT

 
Did you know?

Upon getting NRI status, a resident savings account must be be either closed or converted only to an NRO account. It cannot be converted to an NRE account basis prevailing FEMA regulations.

 

Account features and permissible transactions for NRE/NRO/FCNR (B) accounts

Please note, tables are best viewed on desktops or in landscape mode on mobile phones.

Account Features NRE NRO FCNR

Account maintained in

Indian currency

Indian currency

Foreign currency

Deposit currency

Indian rupee and foreign currency (basis conversion at applicable rates)

  • Foreign currency (earned overseas) and transferred from an overseas account and converted to Indian currency (basis conversion at applicable rates)  

  • Indian currency. In case of transfer from another NRE account.

Foreign currency

 

Withdrawal currency

Indian currency

Indian currency

Foreign currency

Interest earned

Taxable in India 

Tax-free in India

Tax-free in India

Type of accounts

  • Savings

  • Current

  • Recurring

  • Fixed Deposit

  • Savings

  • Current

  • Recurring

  • Fixed Deposit

  • Fixed Deposit

Joint holding

 

Can be held with two or more NRIs/PIOs.

And

Can be held on a ‘former or survivor’* basis with a resident.

Can be held with two or more NRIs/PIOs.

And

Can be held on a ‘former or survivor’*,  basis with a resident relative**

Can be held with two or more NRIs/PIOs.

And

Can be held on a ‘former or survivor’*,  basis with a resident relative**

Power of attorney (PoA)***

Permitted

Permitted

Permitted

Permitted payments and transfers

  • Local payments

  • Transfers to other NRO accounts

  • Outward remittance of current income without limit.

  • Outward remittance of capital funds (up to USD 1 million per Financial Year).

  • Local payments

  • Outward remittances

  • Transfer to other NRE/ FCNR (B) accounts and investments in India.

  • Local disbursements

  • Outward remittances

  • Transfer to other NRE/ FCNR (B) accounts and investments in India.

Repatriation

  • For current income, freely repatriable without limit.

  • For capital funds, permitted up to USD 1 million per Financial Year

  • The above repatriation is subject to necessary tax compliances and documentation such as Form 15 CA

Freely repatriable

Freely repatriable

*The term ‘former’ or ‘survivor’ basis refers to the condition where only one of the two joint account holders that is the former account holder can primarily operate the account. The ‘Survivor’ can only operate the account after the ‘Former’ passes away.

**Relative is defined under section 2 (77) of the Companies Act, 2013. This includes their parents (including stepparents), son (including stepson), son’s wife, daughter, daughter’s husband, siblings (including stepsiblings), and children.

***Reserve Bank of India: Master Directions- Deposits and Accounts

Conclusion

NRE, NRO and FCNR (B) accounts serve specific purposes and offer different advantages. An NRI should choose which accounts to maintain basis their requirements.

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Frequently Asked Questions

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Can an NRI maintain all three NRE, NRO and FCNR (B) accounts simultaneously?

Yes, you can mantain all three accounts simultaneously. You can use a combination of these accounts to manage your finances, depending on the income sources and financial needs.

Can a resident Indian be a joint holder?

Yes, any resident Indian can be a joint holder in an NRO account. However, only a resident relative can be a joint holder in the NRE/FCNR (B) account. 

For detailed information on joint accounts for NRIs, click here.

Can an NRE/NRO account be opened online?  

Yes, you can open both NRE and NRO account online (in case the channel is available with your bank). Click here to open an ICICI Bank NRE or NRO account.

What happens to NRE/NRO/FCNR (B) accounts when an NRI returns to India?

Once you relocate to India, you must contact your bank to convert your NRI accounts to a resident account.

However, you can hold FCNR (B) accounts until maturity. Alternatively, you can choose to convert your FCNR (B) deposit into a Resident Foreign Currency (RFC) Deposit Account. This will enable you to continue maintaining foreign currency holdings.

You must also provide the bank with proof of your resident Indian status and submit the necessary documentation.

Ravi gets an overseas assignment from his company. Before he leaves, can he trasnfer money from his existing investments like FD and mutual funds abroad?

Before getting NRI status, Ravi can dilute his investments and can take USD 250,000 under the prevailing Liberalised Remittance Scheme (LRS) norms. As per RBI regulations after getting NRI status, Ravi will have to re-designate his resident savings and deposit accounts to an NRO account. For all investments, he will have undergo a Re-Know Your Customer (Re-KYC) process.

Sanya is being sent abroad for a multi-year corporate project. What will happen to her existing investments, like FD and mutual funds?

As per RBI regulations, Sanya will have to convert her existing resident savings and deposit accounts to an NRO account. For her mutual fund holdings, she will have to update her status to a non-resident with the respective Asset Management Company (AMC). This investment will be regarded on a non-repatriable basis. The income earned in India, such as interest on FD and dividends on mutual funds are treated as current income and are permitted to be credited to an NRO account. Sanya can freely repatriate her current income (as defined above) if she wants to. Balances in her NRO account will be considered as capital income and can only be repatriated up to USD 1 million per Financial Year cumulatively for all NRO accounts she holds in India (subject to prevailing FEMA regulations).

What are the currency options on the FCNR (B) account?

As per the prevailing FEMA regulations, banks are allowed to accept FCNR (B)  deposists in any currency which is freely convertible. However, the commonly used foreign currencies to open an FCNR (B) account are US Dollar ,Euro, British Pound, Australian Dollar, Canadian Dollar and Japanese Yen. Please consult with your bank's to know about the permissile currencies for opening an FCNR (B) deposit account with your bank.

Can I transfer funds from my FCNR (B) to an NRE or NRO account? 

Funds available in FCNR (B) are freely repatriable. Transfer of funds from FCNR (B) to an NRE account or vice versa is allowed. 

Can I transfer funds from my NRO account to an NRE or NRO account?

NRO to NRE transfer: Rental income, dividends from investments, pension, interest from fixed deposits (FD) and bank accounts, among others deposited in an NRO account classify as current income. These funds can be freely transferred to an NRE account without any limit. Other balances in an NRO account can be repatriated abroad or transferred to an NRE account up to USD 1 million per Financial Year.

 

You may consult with your bank for requirement of Form 15 CA/CB at the time of transfer of funds from NRO to the NRE account.  

Can I appoint a resident Indian as a  mandate holder to operate my accounts and make investments on my behalf?

Yes, you may appoint a resident Indian as a mandate holder to operate your bank account as per permissible operations/transactions on behalf of the primary applicant.

Know more on how to appoint a mandate holder for NRIs. 

Are NRE, NRO, and FCNR (B) accounts insured by the Deposit Insurance and Credit Guarantee Corporation (DIGC)?

NRE, NRO, and FCNR (B) accounts are insured by the DICGC up to a maximum of ₹5 lakh per depositor, per bank.

View More

Recommended For You

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What is an FCNR(B) Fixed Deposit account?

Holding an NRI joint account: All you need to know

A must-do for NRIs: Convert your resident savings account to NRO

Managing your NRI account through a mandate holder?

How can NRIs use PoA in India to manage their banking needs?

How to activate a dormant NRI account?

NRO accounts: Explained

Disclaimer:

The contents of this article/infographic are meant solely for informational purposes. The contents are generic in nature and are not intended to serve as a substitute for specific advice on any matter whatsoever. The information is subject to updation, completion and verification and the applicable norms may keep changing materially from time to time. This information is also not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to applicable laws or would subject ICICI Bank Limited/its affiliates to any licensing or registration requirements. ICICI Bank Limited/its affiliates and their representatives shall not be liable for any direct or indirect losses or liability incurred arising in connection with any decision taken by any person on the basis of this content. Please conduct your own due diligence and consult your financial advisor before making any decision. Terms and conditions of ICICI Bank and third parties apply. ICICI Bank is not responsible for third party services. Nothing contained herein shall constitute or be deemed to constitute an advice, invitation or solicitation to avail any products/ services of third parties.

 

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