Main Types of NRI Bank Accounts | SBI PO Prelims & Mains Preparation - Bank Exams PDF Download

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Bank Accounts for Non-Resident Indian (NRIs)

1. NRE- Non -resident (external) rupee account.
2. NRO- Non- resident (ordinary) rupee account.
3. FCNR(B) - Foreign currency non-resident (banks)accounts.

These accounts can be distinguished as follows:

• While NRO and NRE  accounts can be kept in the from of current , saving or term deposit accounts, while FCNR(B) deposit  can be kept only in the form of term deposits, for period ranging from 6 months to 3 years.
• Money from an NRO account is non-repatriable, but NRE and FCNR deposits are repatriable.
• Remittances from abroad can be credited to any of these accounts . But earnings of NRIs on the property held by them in India, which are non-repatriable , can be credited only to NRO accounts.
• Interest earned on NRO accounts is eligible for repatriation.
• An NRO  account may be jointly held  with residents while NRE and FCNR (B) accounts cannot be jointly held with residents . But Indian resident power of attorney is permitted for local payments and investments in India.
• Balance held in NRE/FCNR accounts  are  exempted from wealth  tax and interest earned is exempted  from income tax. There are no tax exemptions on interest earned on NRO accounts.

Easy way:

In simple terms NRIs can deposit income from Abroad in NRE accounts while income earned from Indian property need to be desposited in NRO accounts. This money is Non-Repatriable while interest earned on such money is Repatriable, means it can be converted into any foreign currency.
FCNR(B) accounts are meant for term deposits.

• Repatriable Accounts : Indian rupees can be transferred back to foreign currency, in simple terms Indian Rupee can be converted to any foreign currency.
• Non-Repatriable Accounts : Money cannot be converted to any foreign currency.