NRE and NRO Bank Accounts

As many Indians today work in different countries around the world, repatriation of money earned abroad has taken centre stage. For repatriation, government and private banks have provided non-resident Indians (NRIs) with many banking options. Through these, NRIs can hold a rupee account and conduct transactions between foreign countries and India without too many hassles. They can open two different types of bank accounts – NRO and NRE.

NRI bank accounts

These type of accounts can be opened by NRIs in any Indian national bank or private bank that operates within India’s boundaries and one that is authorized by the Reserve Bank of India. Basically, the account can be opened by any citizen of Indian origins who is living in a foreign nation for an indefinite period. The account has to be opened by the NRI or a person that the NRI has provided with a Power of Attorney. The main advantage of having such an account is that it allows for investment and trade in foreign currencies in Indian markets.

NRO bank accounts

A Non Resident Ordinary Rupee Account can be created by any person of Indian origins before he or she leaves India to work in a foreign country; basically, the account can be opened by an Indian citizen who hopes to or plans to become an NRI. Funds deposited into a NRO account can only be kept in rupees and cannot be converted into foreign currency or repatriated. Although money cannot be sent outside India or converted into  foreign currency from an NRO account, the account owner can send money into this account from a foreign country. Funds received into this account will be reported to the Reserve Bank of India. Once the account holder returns to India, the NRO bank account can be restored to become a normal resident account.

NRE bank accounts

A Non-Resident External Account can be only opened by NRIs or any person of Indian origins who has lived abroad for at least 180 days. The account can be opened in national or private banks using any foreign currency. The account mandates that foreign currency can be converted to Indian rupees at the exchange rates at the time of conversion. The person who holds the account is free to repatriate funds from foreign countries into India and from India to other countries. The purpose of an NRE account is to allow feasible and efficient transfer and conversion of foreign currency and Indian rupees. The NRE can be converted to a resident account once the account holder returns to India.


Disclaimer: Copyright Kotak Mahindra Bank Ltd.

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