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.
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.
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.
You can transfer funds from NRE to other Indian accounts too (if you need to make any payments to an Indian resident). Additionally, if you make frequent transfers from India to abroad, NRE does not have limits like NRO accounts.
But if you receive payments in rupees like rent on your house in India, NRO is a better option.
RBL NRI Accounts
RBL or Ratnakar Bank as it was formally called offers an interest rate of as much as 6.5 (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 a decent interest rate. They can go as high as 7.75 percent (12-month deposits).
Interest rates on NRE and NRO account are the same for RBL Bank.
Deutsche Bank Value Plus Savings
Deutsche Bank Value Plus Savings is also a good proposition because the complimentary international gold debit card is loaded with good benefits. It gives you attractive reward points at merchant establishments and 2.5 percent petrol surcharge waiver at all retail outlets in India. However, with this NRE Value-Plus Savings Account, you need to maintain a very high balance i.e either a minimum Average Quarterly Balance (AQB) of Rs. 100,000 in Savings Account or a minimum Assets Under Management (AUM) of Rs. 150,000.
The one reason to open an NRE Savings Accounts at Deutsche Bank is the attractive interest rates on NRE deposits of 7.5 percent for 5 years. This is the best interest rates that you can get from a bank in India.
Bank of Baroda NRE Savings Account
The one reason to recommend Bank of Baroda savings account is that this bank has a number of branches abroad including those in Australia South Africa, Europe, Middle East, Africa, Far East etc. This makes it easier to serve Non Resident Indians here.
Apart from this a premium NRE savings account offers you benefits like preferential allotment of lockers, free remittance facility in case the beneficiary maintains bank account in India, custodial services free of cost and zero charges for collection of cheque drawn on self account, travel cheques, currency notes tendered during personal visit.
Thus far the bank does not seem to have slashed its NRE Savings Bank account rates and it continues to remain at 4 per cent p.a that is payable on daily balances. This is one of the better NRE Savings Bank Accounts to open.
Kotak Mahindra Bank
Kotak Mahindra Bank offers its NRI customers 6.25 to 6.90% interest rate on NRE Fixed Deposits depending on the term . To add to the good news, the interest amount earned on these fixed deposits is completely tax-free & fully repatriable. Interest rate on NRE savings account balance is 4 per cent.
Kotak NRI Privy league program offers exclusive and premier services to its NRI customers. The NRE savings account requires the concerned to maintain low quarterly balance of Rs. 10,000. Within the category, NRE platina and NRE Rupee savings account can be opened. Remittance of your foreign earnings can be made by either Clicktoremit or cheque or wire transfer.
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.