Which Bank is Best for an NRI Account ?

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Key Takeaways

If you are planning to leave India and live life as an NRI (Non-Resident Indian) soon, it is important for you to learn two things – one, the kind of bank accounts one can operate in India as an NRI may have to handle finances back home, and two, how to choose the best bank for NRI account. Managing these two aspects intelligently will help you save money and grow your assets over time.

Introduction

New Non-Resident Indians (NRIs) who have just moved out of India have a lot to deal with as they settle down in a foreign land. Everything is new to them – the country, the culture, the workplace and even the people. There is also a new banking system to learn about and handle. While it may seem relatively simple to do so, there are many challenges that Indians may face, as banking operations and practices vary from one country to the next.

If you are not aware, once you become an NRI, you cannot operate your old savings account running in India. You would have to close it and find yourself the best NRI account in India in order to manage your remittances, savings, investments and income in your home country.

What is NRI Account?

An NRI account is an account opened in India by a Non-Resident Indian (NRI) with a bank or financial institution that is authorised by the Reserve Bank of India (RBI) to provide various banking services.

An NRI account lets NRIs deposit their foreign as well as Indian income in India while they work overseas. These accounts are of mainly of three types based on their purpose:

1) NRE accounts: A Non-Resident External (NRE) rupee savings account helps you deposit your foreign earnings in India. Interest earned in an NRE account is exempt from Indian income tax as an NRE account only holds income that is not accruing or arising in India. Moreover, funds maintained in NRE savings accounts and fixed deposits are wholly repatriable.

2) NRO accounts: A Non-Resident Ordinary (NRO) savings account is designed to help you manage your Indian earnings while you are based abroad. It is the ideal for those who have some form of income in India such as a rental property, mutual fund dividends, pension, fixed deposits etc. Since an NRO account holds India-based earnings, the interest income is subject to tax deduction at source (TDS). As far as repatriation of funds is concerned, the interest earned on an NRO account is freely repatriable. However, the principal amount can be transferred outside India only within specified limits.

3) FCNR (B) Account: While the NRE and NRO ⁽¹⁾ accounts can be opened as bank accounts or fixed deposits, FCNR (B) accounts can be opened only as term deposits for the purpose of investment. Such accounts are denominated in specified foreign currency, unlike NRE and NRO accounts which are denominated in Indian rupee. The deposit holders can repatriate the maturity proceeds of FCNR (B) deposits without any restrictions. Like NRE accounts, the interest income on FCNR (B) deposits is also tax-free.

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Features and Benefits of NRI accounts

All the three types of NRI accounts can serve an important purpose and be extremely beneficial for NRIs:

1) Attractive interest returns on your deposits: NRI accounts put your money to work and help you earn attractive returns on your NRE, NRO and FCNR accounts and deposits.

2) Huge tax benefits: Along with high interest rates, individuals with NRE and FCNR (B) accounts can enjoy a completely tax-free interest income on their deposits as per the Income Tax Act 1961.

3) Easy fund transfer: If you plan to make frequent fund transfers to India from abroad, or vice-versa, an NRE ⁽²⁾ account can prove to be extremely useful. NRE accounts allow account holders to seamlessly transfer foreign earnings to India while also allowing for unrestricted repatriation of funds back to your country of residence.

4) Facilitate investment in India: NRIs planning to invest in India, either in real estate or other financial instruments like stocks and mutual funds will not be able to do so without operating an NRI account.

5) Avoidance of exchange rate fluctuations: Investing in an FCNR deposit provides a cushion to NRIs from any exchange rate fluctuations as their funds are maintained in a foreign currency. This helps reduce the chances of erosion in your wealth due to unfavourable currency movement.

How to choose the best NRI Saving Account?

For those wondering what the parameters are for a great NRI bank account, or which is the best bank for an NRI account in India, the answer can be found below:

• The first thing you should check is whether the banks you have shortlisted have been authorised by RBI to provide NRI services and banking products.
• Check whether the banks provide services in the country of your residence so that customer support doesn’t become an issue.
• Compare the interest rates offered by the banks on the NRI accounts. Even a small difference in the interest rate on offer can make a big difference in absolute returns on a large deposit base.
• To choose the best NRI bank in India, you should also consider factors like minimum account balance requirements and the charges and fees involved in operating the bank account.
• Also check the various facilities and privileges offered by banks to NRI account holders to ensure complete ease of operations. For example, features like 24x7 customer support, a dedicated relationship manager, customer-friendly mobile and net banking facilities etc. can make a big difference to your banking experience.

Making a comparison on the basis of the aforementioned points will help you choose the best bank for an NRI account in India.

Final note

The best bank to open an NRI account in India is the one that offers you solid customer support, attractive interest rates, a complete range of banking facilities and exclusive benefits at a competitive and affordable price.

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*Disclaimer: This article is published purely from an information perspective and it should not be deduced that the offering is available from DBS Bank India Limited or in partnership with any of its channel partners.

The purpose of this blog is not to provide advice but to provide information. Sound professional advice should be taken before making any investment decisions. The bank will not be responsible for any tax loss/other loss suffered by a person acting on the above.