Living abroad but still want to manage your finances in India? Well, it may sound odd at first, but there are compelling reasons behind it. A non-resident Indian (NRI), Persons of Indian Origin (PIO) or Overseas Citizenship of India (OCI) enjoys several perks across a spectrum of financial opportunities to help them stay connected with their roots while maximising their investment potential. For starters, the benefits of an NRI Account are limitless.
From several tax benefits to easy access to Indian investments, the advantages of an NRI Account cannot be ignored if you’re an Indian employed in some other country. However, having said that, you cannot shy away from a few disadvantages of an NRI Account such as being prone to the risk of currency devaluation and low liquidity.
Let’s explore NRI Account advantages and disadvantages.
Benefits of NRI Accounts
In India, NRI Accounts can only be opened by Indian residents living out of the geographical territories of India for a minimum of 120 days in a year as well as those who have lived fewer than 365 days in the country in the last 4 calendar years.
If you tick these boxes, you can open an NRI Account with banks that offer the facility to enjoy the numerous NRI Account benefits. Axis Bank offers three types of NRI accounts –
- NRE (Non-Resident External) Savings Account: An account opened by an NRI to transfer foreign earnings to India
- NRO (Non-Resident Ordinary) Savings Account: Opened by an NRI to manage the income earned in India
- Foreign Currency Non-Resident (FCNR) Deposit Account: Opted by NRIs looking to maintain a Fixed Deposit Account in India.
All three accounts offer various benefits to account holders. Let’s learn more about the benefits of an NRI bank account here:
1. Tax benefits
NRE and FCNR Accounts provide a crucial tax benefit. If you open an NRE or FCNR Account, you are exempted from paying the income tax on the interest earned from your deposits. However, if you opt for an NRO Account, the interest generated from your deposits will attract income tax in India, which can be one of the few disadvantages of an NRI Account.
2. Currency conversion
You can easily transact in foreign currencies using NRI Accounts. This means that you can use the NRI Account to easily manage all your foreign income or savings without worrying about currency conversion. But this is just one of the NRI benefits of an NRI Account, as you can invest and hold multiple currencies in the same NRI Account.
3. Repatriation advantages
NRE and FCNR Accounts allow full repatriation. This means that the bank allows you to transfer all your deposits and interest to your foreign bank account with no terms attached. You can also avail of repatriation advantages with NRO Accounts, but they will have additional terms and conditions.
4. Joint accounts
NRI Accounts offer the flexibility to open joint accounts. You can open a joint account with a resident relative on a 'former or survivor' basis. You can also open a joint account with a non-resident relative on an ‘either or survivor’ basis. You will have to submit a Power of Attorney for opening joint NRI bank accounts.
5. Easy access to Indian investments
One of the most important benefits of an NRI Account in India is that you can use the funds deposited to invest in various financial assets in India. You can use the capital to invest in investment instruments such as Mutual Funds, Fixed Deposits and real estate, among others.
6. Minimal balance requirement
Most NRI Accounts allow non-resident Indians to keep the account running with a low minimum account balance, without worrying about maintenance fees. However, the minimum account balance varies from bank to bank.
7. FCNR deposit
If you open an FCNR Account, you can deposit and hold the capital in foreign currency. The account provides the benefit of foreign currency deposits, making it easier for you to earn in different currencies and save in Indian Rupees.
8. Convenience benefits
You can manage your finances from any part of the world using Internet banking or mobile banking. These accounts also provide a simplified process for international transactions and reduce the complexities associated with cross-border financial activities.
9. Better interest rates
Banks usually offer attractive interest rates on NRI Accounts than on accounts held by Indian citizens. Moreover, a few types of NRI bank accounts offer income tax exemption on the interest earned on deposits, helping NRIs generate better returns on their investments.
10. Tax exemption for NRE interest income
NRE Account holders enjoy income tax exemption on the interest income generated on the deposits. This helps you maximise returns from the funds you have deposited in an NRE Account.
11. Safe storage of funds
As is the case with all bank accounts, NRI Accounts also store your funds safely.
12. Insurance and loan facilities
You can also avail of several banking and insurance facilities against your NRI Account in India. Banks and insurance companies offer insurance and lending services to NRIs who have operating NRI Accounts.
Also Read: Can I convert my Savings Account to NRE Account?
Summing up!
There are several benefits of opening an NRI account in India. You can choose between the three NRI Accounts – NRE, NRO and FCNR. All three types of NRI Accounts offer their own merits and demerits. Therefore, you should make the final decision after researching them in detail. Happy saving!
Disclaimer: This article is for information purpose only. The views expressed in this article are personal and do not necessarily constitute the views of Axis Bank Ltd. and its employees. Axis Bank Ltd. and/or the author shall not be responsible for any direct / indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information. Please consult your financial advisor before making any financial decision.
