When you become a Non-Resident Indian, you cannot hold your same old savings account that you had opened when you were in India anymore. You will be required to open a separate NRI account. Several banks provide a range of specially designed wealth and banking solutions for the Non-Resident Indians. As being an NRI you should be aware of all the features of NRI accounts.
Features of NRI Accounts
As a new NRI, you may not have clarity on the standard set of features of an NRI account provided by different financial institutions. However, since it is crucial to open an account to manage your incomes and investments, you should be aware of the various NRI account features in India. Today’s guide gives you a quick overview of these with a brief elucidation for your ease of understanding. Let’s deep dive now!
1. Tax Features
Having the requisite clarity of taxation that is applied on interest will assist you in selecting the apt NRI Fixed Deposit as per your requirements. Do note that the interest acquired on NRE Savings Account and NRE Fixed Deposit is free of any taxation, in India. However, the savings in NRO Savings Account and NRO Fixed Deposit are subjected to TDS following the Income Tax Regulation guidelines. Additionally, you also have a choice of shifting your funds from the NRO account to the NRE account after payment of the applicable taxes
2. Feasibility of Opening & Operating Joint Account(s)
NRI account holders are allowed to perform joint, in the case of both NRO and well as NRE accounts. However, do note that this is subjected to specific terms and conditions. Regardless of whether it is an NRE or NRO bank account, you can open and operate your NRI account(s) jointly with two or more NRIs such as your spouse. Additionally, there is an option even to open a joint account with Indian citizens, though this is permissible only in the case of NRO account holders and not for that of NRE accounts
3. Repatriation Services
Another important salient quality of NRI accounts is the repatriation perks. Both NRE, as well as NRO Savings accounts, provide smooth movement of funds. This is because you can repatriate them both, the principal as well as the interest abroad. NRE Accounts’ funds are wholly and freely repatriable. Nevertheless, in the case of your NRO account, the funds are repatriable only once the payment of the applicable taxes is made
4. Ability to Name a Selected
Similar to any other bank account, it is permissible to register nominee(s) when you open an NRI Account in India as well. There are no restrictions as to who all can be named as the selectee; someone may or may not be another Non-Resident Indian. This facility is applicable across all the different types of NRI bank accounts that include NRO, NRE, and FCNR bank accounts
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5. Convenience Benefits
Another advantage of NRE and NRO bank accounts is their convenience. Opening an NRI Account is simple and fuss-free. Most financial institutions let you open an NRI account without having to visit their branch in India. All you required to do is fill an application online, print it out, then attach this self-attested copy of the needed documents and courier it to the respective bank in India
6. Issuing a POA (Power of Attorney)
NRI account holders usually find the requirement to make physical transactions on their accounts either by visiting the bank or otherwise, while based outside India. In such scenarios, they can appoint a power of attorney (POA) to manage these transactions on their behalf. However, the individual(s) selected as a power of attorney are granted limited rights for operating the account
7. The Plausibility of Availing for Different Types of Loans
Despite being based outside India, as an NRI account owner, you can avail for various sorts of loans. For instance, you can apply for a home loan, car loan or for that matter, even a personal loan against your NRI savings account or fixed deposit account in India. In most of the cases, the loan amount is instantly credited into your bank account with the requirement of minimal documentation. Moreover, you can take out these loans at nominal rates of interest.
8. Minimum Balance Requirement
You may not require to maintain large minimum balances in your NRO and NRE accounts. Many banks have lowered their minimum admissible balance requisite significantly. You can check this with the bank of your choice before opening an account.
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9. The Ability to Avail the Overdraft Facility
Another common feature of opening an NRI Account is that an account holder can also access the overdraft facilities. Implying, one can make use of or withdraw more money than what is deposited in their account, up to a limit as authorised by the financial institution. Overdraft is typically a line of credit granted based on balances maintained in the bank account by the account holder. They work as pre-sanctioned loans that can be taken against assets such as fixed deposits, bonds, shares and others, serving as collateral
10. The Expediency of Converting Back to Regular Accounts
When an NRI account holder comes back to India, the account gets automatically changed into an Indian savings account such as a Resident Foreign Currency account. If the deposit has not reached maturity yet, then the bank account continues to function with the previous rates of interest
11. FCNR Deposit
In addition to NRO or NRE saving and fixed deposit accounts, you also have an option of availing for Foreign Currency Deposits. Consequently, if you want to preserve your incomes in Foreign Currency, then you can avail of an FCNR deposit and earn an interest in Foreign Currency. The interests earned on FCNR deposits are also free of tax in India.