Non-Resident Indians (NRIs) who wish to have a savings account or a fixed deposit account in India cannot open a normal account like Indian residents. If you opened one when you were an Indian resident, before moving abroad, you need to convert it into an NRO account.
Depending on your necessity, you can choose between NRO and NRE account. It is illegal for an NRI to hold a residential account and it could attract huge penalties.
What is an NRE account?
An NRE Account is an account maintained by a Non-Resident Indian, where payments are credited only from outside India by way of drafts or RTGS. Withdrawals, however, can be made outside India or within India. The difference between a general S/B Account and an NRE Non-Resident External Account is that the account is held by a non resident, as against public Savings accounts which are managed by resident Indians internal payments can be made only from outside India.
The Reserve Bank of India had a few years ago lifted the interest rate cap on NRE FDs, which were linked to the LIBOR (London Interbank Offer Rate). The one good thing of the NRE Savings Account is that the interest income is tax free in the hands of the investors. This is true for NRE Savings Account as well for NRE Fixed Deposits.
Advantages of NRE Accounts
The advantage of having NRE accounts is income earned as interest is exempted from tax (no TDS deduction as in regular savings account which qualifies for TDS if interest income in a FY exceeds Rs. 10,000 from all the savings account with the bank). The funds are repatriable and can be sent to any country outside India.
The funds can be transferred from this account to an NRO account. However, it is advisable not to do so, given the fact that there is a TDS on interest rates on NRO accounts.
Difference between NRO and NRE Account
NRIs can open two types of accounts: NRO (Non-Resident Ordinary) and NRE (Non-Resident Rupee) account. NRO accounts are used to normally make payments locally and funds can be remitted from India (in rupees) or abroad. NRIs who are travelling abroad can convert their normal domestic account to NRO account. On the other hand, NRE account is maintained through remittances in foreign currency.
Another major difference is that NRE has tax advantages. No tax is deducted interest earned and principal amount from savings or NRE fixed deposit accounts. In the case of NRO account, there is a TDS that is deducted on interest income.
If you have a rented-out house in India, NRO is needed as you cannot deposit Indian rupees in an NRE account. If you make frequent transfers from India to abroad, NRE is a better option, as NRO has a limit on how many transfers you can make abroad.
Things to note while choosing the best NRE account
Look for a host of things. The first thing to look when opening the best NRE savings account is whether you can avail the service in the country of your residence. Check the interest rates also, as these are important if you have large sums of money. We have highlighted a few of the best NRE savings accounts. However, you should know that these could change over time, especially the interest and other facilities that these banks offer. In any case, here they go.
RBL NRI Accounts
RBL or Ratnakar Bank as it was formally called offers an interest rate of as much as 6.5 percent (effective Oct 2017) on its NRI Savings account. This is one of the biggest reasons that we are recommending RBL.
|Daily balance||Rate of interest (%)|
|Up to Rs 1 lakh||5.50|
|Above Rs 1 lakh to Rs 10 lakh||6.00|
|Above Ra 10 lakh to Rs 5 crore||6.50|
The NRE and NRO fixed deposits at the bank also fetch attractive interest rates. Here are the highest interest earning tenure for deposits up to Rs 3 crore on NRE and NR0 accounts w.e.f 25 October 2018:
|Period||Interest rates (%)||Effective annualised rates (%)||Effective annualised rates (%) for senior citizens|
|12 months to less than 24 months||8.00||8.24||8.77|
|24 months to less than 36 months||8.05||8.30||8.83|
|36 months to less than 60 months||7.60||7.82||8.35|
|60 months to less than 120 months||7.60||7.82||8.35|
Deutsche Bank Value Plus Savings
Deutsche Bank Value Plus NRE savings account comes with:
- Instant bank account opening kit
- Complimentary International Gold Debit Card.Flexible cash withdrawal and point of sale limits from Rs. 25,000 to Rs. 150,000
- Earn 0.5 express rewards for every Rs. 100 you spent (conditions applied).
- 2.5 percent petrol surcharge waiver at all petrol pumps across India up to Rs 150 per month.
- Free acceptance at ATMs with leading International banks through Global ATM alliance network.
- Lost card insurance of up to Rs. 2.5 lakhs on your card for 30 days prior to reporting and 7 days post reporting the loss to the Bank.
- NRE fixed deposits at 8.25 percent (5 years) and 8 percent (1 to 2 years) w.e.f 23 October 2018.
However, one is required to either maintain a minimum Average Quarterly Balance (AQB) of Rs. 100,000 in Savings Account or a minimum Assets Under Management (AUM) of Rs. 150,000 in your account, as per the bank's website.
Bank of Baroda NRE Savings Account
Bank of Baroda has a significant global presence with branches in Australia, South Africa, Europe, Middle East, Africa and the Far East.
Its NRE savings account comes with:
- Free remittance facility if the account is maintained at a branch in India
- Demand draft, bankers cheque, cheque book facilities issued free of charge
- No charges for collection of a cheque drawn on self a/c / travel cheques/currency notes tendered during a personal visit
- Free custodial services
- Free Debit VISA enabled ATM card
- Free 24/7 account access through internet banking
- Preferential exchange rate for conversion and allotment of lockers
- Interest at the rate of 4 percent p.a. on daily balances
Kotak Mahindra Bank
The NRE savings accounts at Kotak Mahindra Bank earn 4 percent interest p.a. There are 3 types of NRE savings accounts offered to the NRIs and the interest is payable to their account at different intervals (quarterly or half-yearly).
Interest rates on fixed deposits are as high as 7.30 percent w.e.f 30 October 2018. One can use its net banking facility to make credit card and utility bill payments.
1. NRE Rupee Savings Account
- Average Quarterly Balance to be maintained at Rs. 10,000.
- Easy remittances to India by Cheque or Wire Transfer or Click2Remit.
- Preferential Forex rate for transactions above $10,000 or equivalent.
- 2. NRE Platina Saving Account
- Preferential pricing on products and services
- Global VISA Platinum Debit Card
- Dedicated Relationship Manager across branches in India
3. NRE Mariner Saving Account
- Home loan with 50 percent discount on processing fee
- Global Debit card with up to 10 free non-Kotak ATM withdrawals
- Zero opening fee for Online Investment Account
ICICI Bank NRE Account
NRIs should maintain a monthly average balance of Rs 10,000 at account level or Rs 25,000 at Customer ID level. The bank offers a free mandate ATM card & cheque book for your family in India, giving them anytime, anywhere access to your account.
Also, the account is allowed to be opened with any convertible currency and banks convert the currency into rupee. It is to be however noted that the account remains maintained in Indian rupee. Interest is calculated on an annual basis and paid on an half yearly basis in June and December. The one advantage is that ICICI Bank being a rather large bank, also has branches in many countries of the Middle East as well as the United States.
Interest rates at 4% per annum for end of day balances equal to or above INR 50 lacs and 3.50% per annum for end of day balances below INR 50 lacs.
SBI NRE Accounts
NRIs should maintain monthly average balance or MAB of Rs 1000 at a rural SBI branch while for metro and semi-urban the requirement stands at Rs. 3000 and Rs. 2000 respectively. Interest rate is 4% per annum for balance above Rs. 1 crore and is calculated on a daily basis. The account fetches 3.5% interest rate for balance upto Rs. 1 crore.
SBI has its presence in many countries like US,UK,Canada,Middle East etc.
The account can be opened either singly or jointly with other NRIs or residents on former or survivor basis. The account can be opened with a zero balance. For branches with personal banking facility, deposit of 1 lakh for metro and Rs. 50,000 for semi urban or rural areas has to be maintained.
HDFC NRE Accounts
One can remit funds easily through Quickremit, IndiaLink, Telegraphic Transfers and Cheque and draft facility is for free for this account holders One can avail of free ATM Card for the mandate holder in India
With an interest of 4% on balance of Rs. 50 lakh and above, the account offers interest on a quarterly interval basis. Further, the interest calculation shall be done on the basis of daily balance available in the account.
CitiBank NRE Account
The bank has offshore branches in India ("Citibank India") which provides NRIs with access to products and services. Initial money to open the account is USD 5000 for USA & Canda (varies with other countries). The bank also provides free platinum debit card for its customers.
Interest of 3.5% is calculated on a daily basis and credited on a half-yearly basis in the months of March and September. No tax incidence for interest income, however in your country of residence the same can attract tax implications.