NRE vs NRO vs FCNR Accounts for NRIs
NRE, NRO, and FCNR are the three categories of bank accounts available to Non-Resident Indians (NRIs) and Persons of Indian Origin (PIOs) in Indian banks under the Foreign Exchange Management Act (FEMA) 1999, governed by RBI guidelines.
NRE (Non-Resident External): rupee account funded by foreign earnings, fully repatriable (principal + interest can be sent abroad freely). Interest is tax-free in India. Joint holding allowed only with another NRI. Used for parking foreign income remitted to India. Held in INR — exchange rate risk applies when remitting back. Available as savings, current, fixed deposit, recurring deposit.
NRO (Non-Resident Ordinary): rupee account for managing Indian-source income (rent, dividends, pension, sale of property). Interest is taxable in India (TDS at 30% + surcharge). Repatriation restricted: up to USD 1 million per FY allowed (after CA certificate Form 15CA/15CB). Joint holding allowed with NRI or resident Indian (close relative). Most existing resident accounts must be converted to NRO when status changes to NRI.
FCNR (Foreign Currency Non-Resident): fixed deposit only (1 to 5 years), denominated in foreign currency (USD, GBP, EUR, JPY, AUD, CAD, SGD, HKD, CHF). Avoids INR exchange risk. Interest exempt from Indian income tax. Fully repatriable. Premature withdrawal subject to penalty. Useful for NRIs wanting to invest in INR-denominated returns without taking exchange rate risk on principal.
Richify Tip
When an Indian moves abroad and becomes NRI (typically 182+ days outside India), existing resident accounts must be redesignated as NRO within 90 days under FEMA. PPF accounts of NRIs cannot be extended past maturity. SSY and EPF have different NRI rules. Brokerage demat accounts can continue but require updating PIS (Portfolio Investment Scheme) approval for trading.
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