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Detailed Review Of NRI Banking Services

Updated on Mar 29, 2021
NRI Banking

Many big banks and financial institutions in India offer Non-Resident Indians (NRIs) a wide range of banking products and services - savings accounts, fixed deposit accounts, money transfer services, loans, investment, insurance, and so on.

All of these products and services are accessible from abroad, thanks to internet banking and various banking channels. It is convenient, efficient, and hassle-free. 

NRIs send remittances to India in millions every year for various purposes - savings, investments, financial help for loved ones, or to build a nest egg. Thus, banks offer several financial products and services to provide the best banking experiences to NRIs.

This blog will focus on NRI accounts, benefits, interest rates, fees, customer services, banking channels, and remittances services. 

NRI Accounts

As a Non-Resident Indian (NRI), you are probably aware that you are not allowed to have a residential bank account under your name in India. If you had one when you were a resident Indian, you would have had to convert it into an NRI account once you gained the NRI status. Failing to do so incurs heavy penalties. 

To be declared an NRI, you need to stay outside of India for at least 120 days in a year and spend less than 365 days in 4 previous years. 

Banks offer NRIs the facility to maintain NRI bank accounts in India in  Indian rupees or other foreign currencies. The three main types of bank account an NRI can operate are Non-Resident Ordinary Account (NRO), Non-Resident External Account (NRE), and Foreign Currency Non-Resident (B) Account (FCNR).

An NRE account is for keeping your foreign earnings after converting them into Indian currency while an NRO account is to retain your income earned in India. These accounts can be in the form of savings, current, or deposit accounts. FCNR is a fixed deposit account to keep your overseas income in foreign currency such as US Dollars, Euro, British Pound Sterling, etc for a tenure of 1 to 5 years. 

Resident Foreign Currency Account 

For NRIs who plan to return to India for a continuous period of not less than one year and are bringing back foreign currency from their bank account overseas, they can open a Resident Foreign Currency (RFC account). RFCs can be maintained in foreign currencies such as USD and GBP or others depending on the availability of your banks/ authorized dealers. 

In case you decide to change back to your NRI status, the funds in your RFC account can be repatriated abroad or get it converted to an NRE account or FCNR account.   

Benefits of NRI accounts 

  • Repatriation: NRE and FCNR accounts are fully repatriable. Interest earnings of the NRO account are fully repatriable. The principal amount in the NRO account can be repatriated up to 1 million US Dollars or equivalent in a financial year
  • High Returns: NRI accounts and fixed deposits offers competitive interest rates that allow NRIs to earn high returns 
  • Multiple Accounts: NRIs can maintain multiple NRI accounts with various banks
  • Tax Liability: Principal and Interest of NRE and FCNR accounts are tax exempted 
  • Power of Attorney: NRIs can appoint an Indian resident as the power of attorney who can manage the accounts in India if needed 
  • Investment: NRIs can partake in the Indian stock market and invest in various investment schemes, mutual funds, financial instruments through their accounts
  • Zero risks of exchange rate fluctuations: Deposits in FCNR accounts are protected from fluctuations in the exchange rate and hence no depreciation in the value of the deposits
  • Remote and easy opening of account: Online banking portal makes the documentation and NRI account opening process easy and convenient while staying abroad
  • Easy access to funds: NRI accounts allow for a smooth flow of funds within India and abroad and can easily be accessed from anywhere 

Interest Rates

Interest rates on various accounts differ across banks. Savings accounts or fixed deposits have their specific rates. 

Let's have a look at the table comparing top banks such as State Bank of India, Axis Bank, HDFC Bank, etc on their NRE fixed deposits interest rates for different tenure 

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Fixed deposits have higher interest rates than savings accounts. Let's have a look at the table showing different rates and minimum balance requirements for top banks in India for NRE Savings Accounts.

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You also have the opportunity to earn risk-free higher returns on your investment with FCNR deposits in Indian banks. Banks in the US provide comparatively low-interest rates on fixed deposits. For instance, Bank of America offers 0.03% interest rates on fixed-term CD for a 5-year term. 

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Always check and compare the different interest rates provided by banks before deciding to open savings accounts or deposits. 

Savings accounts are great for facilitating withdrawals of remitted money in India by your family members or by the power of attorney holders when in need of funds. The current account is useful if you have a business in India and there is a need for frequent transactions. 

NRI Banking Charges 

There is a range of fees associated with various services and products. Here is a sample of the fee structure of HDFC Bank.

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Online and Mobile Banking Experience 

All of the banks offer online and mobile banking to their NRI customers for added convenience. This is a no-brainer in today's world of tech-savvy customers. 

You can initiate opening your NRI accounts online when you are abroad. You can go to the bank's website from the comfort of your home and fill up an online form for opening your bank account. 

Online transfer of funds lets you complete your transactions without the need to be physically present in India. 

One major drawback with online banking with most banks is that you need to print out and send physical copies of the forms, KYC documents to the physical branch. Once the bank receives the documents, they will need to verify for the account to be finally opened. The process can sometimes take days or weeks.  

Compared to other banks, ICICI's net banking experience is superior. The ICICI's website is user-friendly and hence easy to browse and understand the services offered. 

Additionally, it has multiple branches overseas. You can visit one near your city if required to sort out any issues. It can be difficult with banks that have no overseas branches. 

Mobile banking applications that are freely downloadable offer all your banking needs right at your fingertips. You can transfer money, deposit funds, pay bills, phone recharges, check balance, and a lot more. You can stay updated with instant alerts and statements on account activities. 

Remittance Services and Fees 

India has been the top recipient of remittances in the world for years now. This is because of large Indian diasporas residing in different countries who are sending in money to their families and loved ones or for investments in the Indian economy.

Sending remittances from countries such as the United States, United Kingdom, Canada, and Australia to India is easier and less expensive due to the proliferation of various remittance service providers. While it is much easier to send money internationally today than it used to be, traditional banks are still the best option for sending money from India to foreign destinations.

Top banks in India such as SBI Bank and ICICI Bank offer dedicated remittance services for easy transfer of funds across international borders. They offer competitive rates and charge low service fees.

Popular remittance services by a couple of the banks and the charges are as follows:

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Check our review on ICICI's Money2India services. 

Remittances to India play a significant role in the growth of the Indian economy. NRIs are encouraged to invest more by the Indian government through incentives such as tax exemption, high-interest rates, or making it easier for NRIs to start a business in India.  

The best way to go about sending money when the exchange rate is involved is to compare the exchange rates provided by various money transfer companies in the market that are specialized in cross-border transactions. This way you can save money by choosing the best exchange rate and also avoid paying hidden fees that can unnecessarily increase your expenses. 

CompareRemit is an online platform that allows you to compare the rates and fees in real-time and opt for the money transfer service that appeals to your requirements. It is that easy.  

Customer Service

Virtual assistants are accessible on the website of most of the banks, you can contact customer support and type in your queries, and get a response in minutes. Such is the case for all the top banks in India.

Although there are instances where customer support representatives have limited capability to resolve your problems. There are delays or cases of unresponsive customer support.

Conclusion

Banking in India even as an NRI comes easy because banks are committed to providing the best infrastructure and services for customer satisfaction. Owing to a competitive marketplace, NRIs have plenty of good options for your various banking and investment needs. 

Try out your options and settle for the one that you can trust with your finances. 

With banking and financial technology advancing rapidly, it is hopeful that the services will only get better in the coming years.

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