A Comprehensive Guide to Opening NRI Accounts

Non-Resident Indians often get confused when they have to face a situation of maintaining a savings account in India. Primarily, there are two reasons for opening such an account: NRIs want to repatriate overseas-earned money back to India and/or they want to keep India-based earnings in India.

NRIs - whether individuals, corporations or associations of people - can maintain bank accounts with authorised banks in India. NRIs who have income source in the country and abroad may benefit from having two different types of NRI accounts in India.

One is the NRE (Non-Resident External) account, and the other is the NRO (Non-Resident Ordinary) account. Both these accounts may be opened in the form of current, savings, recurring, or fixed deposit accounts, and depending on the applicant's banking needs.

What Is NRE Account?

NRE account is an Indian Rupee denominated account, which is freely repairable. In this type of NRI account, the income deposited should be earned outside India and Indian currency cannot be deposited in it. The interest received on the sum at the end of the quarter is free from any taxation. The bank also pays interest on the balance at their own determined rates to the account holder.

What Is NRO Account?

The NRO account is a current or savings account that is held in India by the NRI. It helps him/her in managing the income earned in India by means of dividends, rent, or pension. The account holder can manage and deposit funds conveniently through the NRO account. Any NRI is eligible to open an NRO account.

How to Open an NRE or NRO Account?

1. Contact the Bank

The first step is to contact a bank representative. Once you talk to the representative, he/she will inquire about which account you need to open. It can be a joint or single account, and accordingly tell you what documents you will need and email you the forms as well.

2. Download the Form

The form to open these accounts is available on majority of bank websites. The applicant has to download and fill the form to open the account. Many institutions like Axis Bank also offer the facility of filling up the form online.

3. Get Your Documents Ready

The applicant has to submit a proof of Indian origin as well as NRI or PIO status. It can be in the form of passport copy or visa or PIO (Person of Indian Origin) card. Address proof is also mandatory in the form. The applicant should also enclose the payment method that will be used in the form.

4. Attestation

Banks usually ask that the supporting documents should be attested by Indian Consulate or overseas bank. The documents can also be notarized by a foreign authority. Alternatively, providing additional government authorized proof with self-attestation is also allowed.

5. KYC(Know Your Customer)

Many banks require the applicant to fill up additional KYC format to disclose tax residency status and related details under the FATCA (Foreign Account Tax Compliance Act) and CRS (Common Reporting Standard)guidelines. This process may involve the submission of additional documents and proof along with the account opening form.

6. Send It to PO Box

In some cases, the banks will have a PO Box in your country of residence where you can send the documents instead of sending it to India. However, before you decide to mail the documents to the PO Box, check with them if the documents are sent to a PO Box instead of the Indian address.

These documents are generally processed in India and sending your documents to a PO box may add to a delay of as much as 15 - 20 days. Thus, before you decide where to send the documents, it's better to check with them on what they advise, and what will be the difference in cost. The bank representative will follow up with you in some time. However, it is a good idea to email him/her that you've mailed the documents. This will help them in keeping a record and accelerating the process.

'Summing Up'

Selecting the correct account depends on examining your and your family's financial requirements. If you foresee the necessity of maintaining foreign earnings in INR, then an NRE account is a better choice. However, if you wish to save India-based earnings in INR, then NRO account should be the choice. Both NRE and NRO accounts can help you in managing your funds in a much more convenient and secured manner.