NRI Banking in India

Non-Residential Indians (NRI’s) and Persons of Indian Origin (PIO) fall into a special category of individuals who’ve been designated certain privileges by the apex body of banking in India – The Reserve Bank of India. According to the Foreign Exchange Management Act (FEMA), 1999, a person resident outside India means a person who is not resident in India.

Accounts that can be maintained by NRI’s and PIO’s:

NRI’s and PIO’s can open bank accounts with institutions authorized to trade in foreign currency without the permission of the Reserve Bank of India. They can operate three different types of NRI Banking accounts, they are:

·         Non-Resident Ordinary Rupee Account (NRO Account)

·         Non-Resident (External) Rupee Account (NRE Account)

·         Foreign Currency Non Resident (Bank) Account – FCNR (B) Account

·         The NRO Savings accounts can also be maintained with Post Offices in India.

Non-Resident Ordinary Rupee Account (NRO Account):

This account is like any other account that can be opened by resident Indians. It can be opened / maintained in the form of current, savings, recurring or fixed deposit accounts. The deposits though have to be in Rupees. NRI’s and PIO’s can open a joint account with resident Indians.  The two types of accounts that can be operated are:

·         Savings Account – This is no different than the usual savings account most people operate. You can credit legitimate dues /earnings / income such as dividends, interest etc., in this account with the bank free to determine the rate of interest.

·         Term Deposits – NRI’s can invest in a financial institution for a period of time. However, the interest rate can’t be higher than those offered by them on comparable domestic rupee deposits.

The NRO account is unique in that it allows the debit of income originating in India from sources like dividends or interest. As a result, these are not tax free per se and you have to pay the corresponding income, wealth and gift taxes. The other interesting thing to note is that there’s very limited scope of transferring the funds from India to overseas locations.

To open this account, you need to submit attested copies of your passport, visa, work permit along with appropriate proof of Indian or overseas address. Some countries have signed Double Tax Avoidance Agreement (DTAA) with India. In case you want to enjoy concessional tax rate, you will have to submit a Tax Residency Certificate (TRC), Permanent Account Number (PAN) card, and the original DTAA Annexure. Also, the minimum account balance that’s required is Rupees 10,000.

Non-Resident (External) Rupee Account (NRE Account):

This account may be in the form of savings, current, recurring or fixed deposit accounts. Such accounts can be opened only by the non-resident himself and not through the holder of the power of attorney. The account has to be maintained in Indian Rupees. Like the NRO Account, you can operate a Savings Account or invest in Term Deposits, with the concerned financial institution free to determine interest rates. The four key points to note about this account are:

·         There is no provision to allow debit of income earned in India

·         It is not taxable

·         There are no limits on the amount of money that can be transferred to a foreign country

·         You can open this account with another NRO or PIO, but not a resident Indian

Most people who open this account are willing to park funds abroad in Indian rupees.  In the current climate though, this wouldn’t be the best of ideas. Exchange rate fluctuations leave you vulnerable to taking a huge hit and any depreciation the Rupee suffers will have an adverse impact on this fund.

Foreign Currency Non Resident (Bank) Account – FCNR (B) Account:

FCNR (B) accounts are only in the form of term deposits of 1 to 5 years. All debits / credits permissible in respect of NRE accounts, including credit of sale proceeds of FDI investments, are permissible in FCNR (B) accounts also. The great thing about this account is that it can be in any freely convertible currency most often in US$ or Pound Sterling. Apart from these three bank accounts, a non-resident Indian also has the option of jointly owning a regular bank account with a resident India, although without the power to operate it.

Source: http://kotaksecurities.blogspot.nl/2014/02/nri-banking-in-india-40018.html

The NRI dream home loans in India!

Owning a home is a dream for most of us and thanks to the diverse home loan schemes available to make that dream a reality. How is this different in case of Non- Resident Indians (NRI)? Is it equally easy for them to obtain a home loan and own the property of their choice? NRI home loans are now easily available in India, subject to fulfillment of certain conditions.

NRI Status:

When it comes to defining a NRI, all banks and financial institutions go by the definition specified by the Reserve Bank of India (RBI) i.e., “An Indian citizen who holds a valid Indian passport and stays abroad for employment or carrying out business or vocation under circumstances indicating an intention for an uncertain duration of stay abroad is an NRI.  So those eligible for home loans under this category would be those employed or carrying out business outside India, those posted abroad by the Indian government or companies or those Indians serving in international agencies like the IMF, UN, World Bank etc.

Properties eligible for loan:                                           

Home loans can be availed for any property ready for possession or under construction, construction of property on an owned plot or for alterations to the existing property. Buying of a plot also qualifies for a home loan.

Maximum amount of loan allowed and other conditions:

Income and educational qualifications play an important role in deciding the maximum amount of loan available to an NRI.  Banks allow an advance of 80-85% of the value of the property, subject to the Gross Monthly Income (GMI) of an individual. Maximum amount of loan granted, is in the range of 36-40 times GMI. Some banks also go by the ratio of Equated Monthly Instalment to Net Monthly Income (EMI/NMI).

For E.g.: State Bank of India puts a limit of 40% of NMI against EMI for NRIs with annual income up to Rs 2 L.  For those earning between Rs. 2-5 L, it is 50% of NMI; and for individuals earning more than Rs. 5 L annually, it is 55% of NMI.

Few other banks set different criteria depending on educational qualifications, place of residence etc. For E.g.: With ICICI Bank, for those residing in the Middle East, the minimum annual salary required is 36000 Dhms if the tenure is within 5 years and for tenures between 6-10 years the income requirement is set at 48000 Dhms. While for those residing in the USA and others the respective limits are 30000 USD and 42000 USD. The criteria differs for self-employed, depending on the educational qualifications.

It is important to note that only graduate NRIs can avail home loans in India.

Tenure of loans:

While a resident can avail loans with a maximum tenure of 30 years with some banks, tenure for NRI home loans is restricted. It is available within the range of 5-15 years. Extension beyond the term of 15 years is solely at the discretion of the bank and in exceptional cases only.

Rate of Interest:

There is a higher rate of interest charged on NRI home loans to cover the higher risk involved. There is generally a margin of 0.25% -0.50% charged.

Documents required:

The documentation required for NRI home loans is different from resident home loans. Documents normally required are copies of the passport, valid visa and work permit, contract of employment, work experience certificate, salary certificate and statements of NRENRO accounts. For those residing in the Middle East, copy of employment card is also required. Salary certificate should be attested from the embassy if the salary is not getting credited to a bank.

Submission of documents: You need not wait for your next trip to India to apply for a home loan. Many of the banks have branches in places like Dubai, Singapore, London etc. where you can apply for NRI home loans. Few banks like ICICI, HDFC and Axis also extend the facility of online submission and status updating.

However, you would require executing a General Power of Attorney in favour of a resident Indian who would act on your behalf with the bank. If POA is issuing while you are abroad, it needs to be signed in front of the embassy official.

Repayment of loan: The repayment of these loans can only be through Non-resident External (NRE) or Non-resident Ordinary (NRO) accounts with remittance from abroad. No other funds can be used for repayment of these loans. The repayment needs to be made in Indian Rupees only.

Change in status from NRI to Resident: When there is a change in status from NRI to resident the loan is reworked according to the revised income and interest applicable is charged and the tenure is also revised.

Source: https://blog.bankbazaar.com/the-nri-dream-home-in-india/

NRI Banking

IDBI Bank offers a wide range of NRI banking services like investments, home loans, mutual funds, trading, money transfer & insurance.

IDBI Bank offers a wide range of NRI banking services like investments, home loans, mutual funds, trading, money transfer & insurance.

NRI Banking - What is NRI (Non-Resident Indian Bank Account) Banking?

Non-Resident Indians (NRIs) have carved a niche for themselves in many parts of the globe as successful entrepreneurs, professionals like doctors and engineers, teachers, artists and in many other professions. NRI Banking services provide a banking and wealth management platform that caters exclusively to the evolving needs and requirements of successful NRIs. Here, we will try and summarize the wealth management expectations of NRIs:

Wide-ranging product availability

A broad selection of wealth management options including equities, bonds, commodities, cash bonds, mutual funds, structured notes, hedge fund investments and equity-linked products and research and market information services that can deliver global insights.

Lifestyle privileges

Offering insights into the latest trends in luxury living, being invited to exclusive cultural and entertainment shows and wealth management seminars are some of the lifestyle privileges that NRIs look forward to from their banking partner.

Global access and banking convenience

A significant portion of NRIs are globetrotters either working or having business at different international locations. They would like to access their private banking / wealth management accounts from anywhere across the world, at anytime, preferrably through secure digital channels like Internet Banking or Mobile Banking.

Global banking convenience would also mean being able to access a wide network of banking business centres and ATMs worldwide from where they can access and conduct banking transactions easily. A globally accessible phone banking channel would also be an advantage.

Exclusive banking offers

Providing exclusive banking offers acts as a magnet for NRI customers. Examples could include annual fee waivers on credit cards, complimentary global fund transfers, preferential pricing on transactional services and traditional banking products, enhanced rewards programs etc.

Linked access to banking facilities in India

Many NRIs still have binding ties with India including banking and financial relationships. A wealth management provider who can provide easy link-up access to their banking account in India would be preferred to a provider who cannot.

A number of banks have come up with exclusive services to target this segment. In fact, ATMs and relationships to provide high-end access to their NRI Banking wealth management customers.

Source: http://www.articles.howto-tips.com/HowTo-Article-Directory/nri-banking-what-nri-non-resident-indian-bank-account-banking-0

NRI Banking – (NRE or NRO Savings Account) which one NRI should open?

NRE or NRO savings account, which should I open is first doubt comes in mind of any Non Resident Indian (NRI), who wants to open saving accounts in India on Indian banks l and several other public sector banks which offer this facility. NRE and NRO are two kinds of accounts any NRI can open in India, NRE stands for Non Resident External while NRO stands for Non Resident Ordinary account, though both can be hold by Indians there are many differences between them and based upon your need you need to choose to open either NRE or NRO account in India. Almost all major banks both public sector and private sector allows NRI Indian to open both NRE and NRO account. 

Difference between NRE and NRO account for NRI Indians

Now let's see some differences between NRI and NRO account in India 

1) First difference between NRE and NRO account is how you deposit money. Only foreign currency can be deposited into NRE account while you can deposit Indian rupees in NRO account. 

2) Interest rates on NRE and NRO accounts could differ currently many banks provide almost same interest rates on NRE and NRO accounts 

3) Another significant difference between NRE and NRO account is that Money in NRE account is tax free while its taxable in NRO account, if you are maintaining any NRI fixed deposit in your NRE account than both interest and principle are tax free while in case of NRO account interests are taxable. 

4) If you are generating money from rents than you need to have an NRO account because INR currency cannot be deposited into NRO account. 

5) Once money is in your NRE account you can transfer Indian Rupees (INR) to other accounts in India including NRO accounts. IF you are thinking to open NRE or NRO accounts choose banks which has better customer support and net banking facilities. 

6) If you want to send money abroad from India, NRE account can be better choice than NRO account which impose a limit on how much amount you can transfer from India to abroad.

If you are now looking for what is the best bank to open NRE and NRO account, please check out that article, it compares three major privates’ banks on various factors which are important for NRI e.g. service, convenience, interest rates and support.

Frequently asked Question on NRE and NRO Account:

Here is a list of some of the common doubt among NRI customers related to NRE and NRO account with Indian banks:

1) Can I open both NRE and NRO savings Account in India?

Yes you can open both NRE and NRO Savings account with one name; there is no restriction on that.


2) Does interest earned on NRE and NRO Savings account is Tax Free?
Interest on NRE Savings Account is tax free but on NRO savings account you need to pay tax much like any other saving account in India.


3) Can I open NRE and NRO account in one Bank?
Yes, you can open both NRE and NRO account in same bank. If you already have a resident saving account with any bank

This is what I know about NRI Banking NRE and NRO account and what difference between them. There could be some more, if you know then please post as comment. This will be a good reference point for any NRI Indians who are looking forward to open NRE or NRO savings account in India. Even if you are thinking to open both NRE and NRO which is a good idea, it’s beneficial to know limitations of your NRO savings account and what operations you can do and which transactions are not possible with NRO or NRE savings account.

Tags: NRI Services, NRI Banking

Source: https://nribankingindia.quora.com/NRI-Banking-%E2%80%93-NRE-or-NRO-Savings-Account-which-one-NRI-should-open

NRI Banking - What to Know About NRI Accounts

India is likely to go ahead with a plan to issue rupee-denominated bonds overseas for the first time, in an effort to bring in capital and arrest the rapid fall of its currency against the dollar, a senior government official told The Wall Street Journal last week.

Details about the bond are patchy and it’s unclear when they might be issued. But according to the official, the bonds under consideration will protect overseas investors from currency fluctuations, an attractive proposition given that the rupee has fallen around 22% against the U.S. dollar since May and reached another new low Wednesday of 68.75 rupees against the greenback.

The proposed bonds would be targeted at investors who have an interest in India, such as Indians living abroad and companies which need rupees at a future date to expand their operations in the country, according to the government official.

So what should nonresident Indians know when considering buying the proposed bonds?

Financial planners say they’ll need to check the interest offered on these bonds, and details of how the Indian government plans the interest earned on them. The success for these bonds will depend on how they “compare to alternatives already available for nonresidents to invest in India,” said Vishal Dhawan, a financial planner at Mumbai-based Plan Ahead Wealth.

With interest rates in the U.S. at below 1%, many investors may want to lock into India’s higher interest rates. But they already have some routes available to do so, in the form of bank deposits offered by Indian banks to non-resident Indians.

Earlier this month, India allowed banks to offer higher interest rates to nonresidents than they were paying earlier, in a bid to encourage foreign capital into the country.

Some banks like Mumbai’s Axis Bank, have already raised interest rates on such deposits.

Here’s a look at the three main types of deposits currently available to nonresident Indians:

Foreign currency denominated nonresident fixed deposits, allow an individual to invest in a foreign currency, say U.S. dollars or British pounds, and get their money back in the same currency.

This investment works best for people who want to earn a higher interest rate than their local bank, say in the U.S. or U.K., but don’t want to take any currency risk.

Interest on these accounts varies depending on the bank and the currency of investment.

ICICI Bank pays around 3.6% interest annually for a five-year bank deposit held in U.S. dollars, whereas HDFC Bank pays 4.56% for a similar duration. Foreign banks pay lower interest on similar deposits.

U.K.’s Standard Chartered Bank pays an interest rate of around 0.8% for a U.S. dollar-denominated bank deposit of three years. It doesn’t offer a five-year deposit.

Nonresident External accounts (NRE): These bank accounts are maintained in rupees, and thus carry currency risk.

If the rupee depreciates further during the tenure of the bank deposit, the investor could end up getting lower amount of dollars or pounds at the time of repatriating funds.

But these deposits carry hefty interest.

An NRE savings account, for instance, pays a 4% interest rate. A five-year NRE fixed deposit would pay 8.75% per year at banks like ICICI Bank of HDFC Bank.

The interest earned on these deposits is not taxed in India, but would likely be taxed in the country of the investor’s residence.

These deposits make sense for those who feel that the Indian currency is likely to be stronger after a period of time for which they’ve made the investment. The principal and interest earned on these accounts is fully repatriable.

Finally, nonresident Indians or people of Indian origin can also access the nonresident ordinary or NRO account or deposit.

This deposit can be used to invest income earned by nonresidents within India, such as rental income from an Indian property. Funds in this account are held in rupees, and the interest rates are similar to those paid on NRE accounts.

But unlike the NRI Banking, banks would deduct a portion of the taxes on any gains made on this account, though this tax can be offset against tax payable in the U.S. or other countries.

Also, deposit-holders can withdraw only $1 million a year from these accounts. This account is the option for nonresidents who earn money in India that must be deposited in an Indian account before it can be taken out of the country. Nonresidents are not allowed to hold normal current accounts in India.

Source: (https://nribankingblog.wordpress.com/2015/11/04/nri-banking-what-to-know-about-nri-accounts/)