As a Non-Resident Indian or NRI, you may earn in India as well as overseas. However, under the FEMA guidelines, you cannot own a regular Savings Account in India. This is when an NRI Bank Account can come to your rescue. Today, there is more than one NRI Account you can choose from. These include a Non-Resident External or NRE Bank Account and a Non-Resident Ordinary or NRO Bank Account.

However, if you struggle to choose a suitable option for your requirements, this article might be helpful. Here, we will explore more about NRE and NRO Accounts and offer tips to help you make the right selection.

About NRE Accounts

An NRE Account is a rupee-denominated Bank Account that NRIs can open in India. They can use such an account to deposit and save their foreign currency income in India. You can open it individually or jointly with another NRI. The following are the essential features offered:

• NRIs can use this account to deposit the funds they earn overseas. However, they cannot use it to deposit their domestic earnings.
• At the time of deposit, your foreign currency earnings get converted to Indian Rupee.
• You earn interest at NRE Savings Account interest rates on the funds you deposit in this account.
• You can use the money in the account to invest in India. You can also use it for business activities in India or for personal reasons.
• The principal amount you deposit and the interest you earn on it is freely and fully repatriable to the country you reside in. You also do not have to pay taxes on them in India.

About NRO Accounts

An NRO Account enables NRIs to manage the income they earn in India. This may include the interest from Fixed Deposits, dividend income from Mutual Funds, rent income from property, etc. The following are the key features of this NRI Account:

• You can open an NRO Bank Account in India to deposit foreign currency and INR. However, the foreign currency deposited gets converted automatically into INR at the prevailing Forex rates.
• You earn interest on the money you deposit in this account. The interest is freely transferable or repatriable. However, it is taxable.
• In the case of an NRO Savings Account, you can only transfer a maximum of USD 1 million or its equivalent in a financial year. However, you must pay the applicable taxes before that.
• You can open an NRO Account jointly with an NRI or a resident Indian.

Which to choose?

The choice between NRE and NRO Accounts comes down to personal needs. So, if you want to manage and hold your foreign currency earnings in India while enjoying full repatriability, open an NRE Account online. However, if you need an account to save and manage your income in India, an NRO Account might be a better option.