If you are an Indian employed overseas or has a business abroad, you still have the option to invest in India through safe instruments like fixed/term deposits. Most Indian banks including small finance banks and multinational banks with branches in India provide NRE and NRO account facilities. These account options allow you to park your foreign earnings safely and also your revenues from investments in India.
Who is an NRI?
According to tax laws, anyone who stays in India for less than 182 days in a financial year is considered a non-resident Indian (NRI). If you are an Indian citizen employed outside the country or has a business abroad you can be an NRI. They hold an Indian passport.
What is an NRE Account?
An NRI can open two kinds of accounts in India- NRO and NRE accounts. The major difference is that you can only credit an NRE (Non-Resident External) account in foreign currencies whereas NRO (Non-Resident Ordinary) is for earnings in India like rent earned from a property, pension, etc.
On the other hand, ideally, if you hold a regular savings account in India before you move abroad, it will be converted into an NRO account. It can also be opened after one moves overseas. In this account one can park any earnings made in India (or through a closely related resident of India) and send it to your overseas account, however, there is a limit on how much money you can repatriate, unlike NRE account.
Who can open an NRE account?
An NRI, a PIO (Person of Indian Origin) or a OCI (Overseas Citizen of India) can open it.
Benefits of opening NRE account
- You will be able to open a fixed or recurring deposit account with the bank.
- You can invest in mutual funds in India.
- Interest earned on the account is tax-free in India.
- Principal plus interest is fully repatriable.
- You can convert your foreign currency into Indian rupees to make any purchases in India.
- Funds from this can be transferred to another NRE account or NRO account or a resident Indian account.
- You can also pay bills of any family member living in India in Indian rupees.
Documents needed to open an NRE account?
- Valid Visa or permanent resident proof
- Indian address proof if you have a different address in your passport
- Overseas address proof
You will have to self-attest these documents or get them attested from the Indian Consulate or overseas bank or be notarized by a foreign notary based on your chosen bank's requirements.
How to open an NRE account overseas?
It is very easy now to open an NRE account online without the need to visit the bank's overseas bank or one in India. Most public, private and foreign banks with operations in India even provide online facilities. In fact with increased competition, some private banks even send representatives for a free doorstep service to pick up documents.
There are also completely paperless services provided by some of these private banks in certain jurisdictions. For example ICICI Bank has a paperless service for NRIs and PIO (Person of Indian Origin) in the USA. HDFC on the other hand has drop box facilities in the USA, the UK, Singapore, Canada and the UAE, where one can drop their completed downloaded forms along with required documents.
Another way to do it is to visit a branch of an Indian bank like SBI (State Bank of India) where the staff will help you with the procedure.
Procedure to open an NRE account online
The general procedure in most involves the following:
- Fill an online application from the bank's website. Make sure to note down any tracking ID provided to keep a track of the application status.
- Note the documents required for the process.
- Print the document and sign in relevant places. Paste the photograph where required.
The procedure after filling the application is bank specific. While banks like HDFC have multiple collection boxes where you can submit the application, others require you to post the documents to the address provided on their website. Make sure to thoroughly read the instructions.
Banks like Kotak and Deutsche provide free doorstep pick up service where the bank's representative will collect your documents.
How to open an NRE account in India?
On your visit to India, you can go a branch of the choice of your bank and open an account but make sure you are carrying all the required documents with you.