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Choosing the Best Savings Account for NRIs: NRE vs NRO Accounts

Updated on January 08, 2024 11:40 am
ICICI NRI Banking

For Indians moving abroad, you will have a multitude of choices you will need to make. One of the most pivotal decisions you will need to make revolves around selecting the right bank account to manage finances. It can get very overwhelming. Rest easy, we are here to help make that decision as easy as possible. 

India’s banking system offers two types of accounts tailored for Non-Resident Indians

(NRIs): Non-Resident External (NRE Account) and Non-Resident Ordinary (NRO Account). Understanding the nuances and similarities between these accounts is vital to making an informed decision.

What is an NRE Account?

An NRE account is a savings account allowing NRIs to deposit foreign income earned outside India. A significant advantage is the repatriation of both the principal amount and the interest earned, facilitating easy transfer of funds to your overseas account without restrictions.

Additionally, interest earned on NRE accounts remains tax-free in India, providing NRIs with an efficient means to save and grow their foreign income. However, funds in this account must be maintained in Indian National Rupees (INR).

How Does an NRO Account Differ? 

In contrast, an NRO account is designed for managing income earned within India, like rental income, dividends, or pension. While NRO accounts also offer repatriation benefits, they come with limitations. The transfer of funds from an NRO account to an NRI account is capped at $1 million per financial year, requiring a certificate from a chartered accountant affirming tax compliance, including TDS rates, deductions, and DTAA applicability.

Interest earned on an NRO account’s balance is taxable under Indian tax laws, with funds also maintained in Indian Rupees.  

Choosing Between NRE and NRO Accounts

The choice between an NRE and NRO account should align with your income source and repatriation needs. An NRE account suits foreign-earned income and easy repatriation, while an NRO savings account is best for Indian-sourced earnings, allowing limited repatriation after tax deductions.                                                     

Benefits of NRE and NRO Accounts:

1. Access for Family Members: Both NRE and NRO accounts offer easy access for family members in India. Banks like ICICI Bank NRI Services provide a mandate Holder card and a chequebook to the customer’s family members for convenient access.

2. Interest Rates: Interest rates on both account types are similar, varying slightly among banks. Checking prevailing rates before deciding is prudent.  

Explore ICICI Bank NRI Services

Open an NRE or NRO Account with ICICI Bank for lucrative features like Dedicated Relationship Manager, Family Banking services, attractive interest rates and more.

Making the Right Choice  

Selecting between NRE and NRO accounts requires careful evaluation of your financial circumstances. Each offers distinct benefits catering to different needs. Consider income sources, tax obligations, repatriation needs, and family access before deciding. Consulting with bank representatives can provide clarity and guide you toward the optimal decision for your financial situation and goals.

To compare the top NRE and NRO accounts–including ICICI NRI–to find the best one for you, visit the NRE Account Compare Page or the NRO Account Compare Page.   

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