A bank account is essential to store all the savings and assets of customers living worldwide. It helps them during an emergency or urgent payment of funds. They can rely on banks for keeping their assets safely and offering them interest on the account. They can easily withdraw and transfer funds, check the account balance, pay bills, and access many more banking services.
An NRI has multiple choices of opening a bank account in India. They can also open a Non-Resident Ordinary account or NRO online which carries the benefits of a regular resident account. The funds, however, can be repatriated by following specific processes which are not involved in an NRE account. Choose between NRE and NRO depending upon the trading or investment pattern and the preference for repatriating money.
The NRE account is for Indians residing abroad and having a non-resident status as per the Income Tax Act. It allows the transfer of foreign earnings easily to and from India. Individuals can open it as savings and fixed deposit accounts. The interest they earn on them are tax-free and denominated in Indian Rupees or INR.
The NRO account is operational only by an NRI to park income arising out of India or to save funds for future use in India. The interest earned in this account is taxable at the peak rate of 30 per cent and the addition of surcharge and education fees. The tax applicable gets deducted in the form of TDS. If there is any excess tax deducted these can be claimed as refund by filing returns.
It also permits nomination of resident Indians and even accepts Indian currency deposits into the NRO bank account, unlike the NRE account. From a stock market point of view, unlike the NRE account, it offers broader and more opportunities for investments. One can execute intraday trades, collateral-based trades, margin trading funding etc. using this account
An NRO account in India offers an opportunity to trade in Futures and Options which is not possible in NRE account. The account holder can buy any stock without any restriction on the Indian stock market.
The FCNR is a fixed deposit account where the bank bears the currency risk instead of the customer. Hence NRIs who are wary of fluctuations in the rupee tend to prefer the FCNR account. Since the currency denomination is as per the account holder’s preference, the rates link to the specific LIBORs offering lower rates of interest. Indian banks offer FCNR deposits in US Dollars, Great British Pound, Euro, Japanese Yen, Australian Dollars and Canadian Dollars.