If you have a business abroad or you are an Indian and employed overseas, you still have the option of investing in India through different safe instruments such as term deposits/fixed deposits. There are banks that allow you to invest and save money safely from your foreign earnings, also allowing you to safeguard the additional revenue earned from the investments. The accounts are known as Non-Resident External Accounts (NRE) or Non-Resident Ordinary Accounts (NRO), these facilities are provided by most of the Indian banks including small financial institutions as well as large banks which have branches in India.
Who are NRIs?
The people who stay in India in a financial year for less than 182 days shall be considered a non-resident Indian, according to the Indian Tax Laws. The employees who work overseas or business owners having their businesses abroad can also be NRIs. They should hold the passport of India.
What are NRO and NRE accounts?
In India, NRO and NRE accounts are the two types of bank accounts that an NRI can open. The major difference between the two accounts is that the NRO (Non-Resident Ordinary) is for Indian earnings such as rent earned from a property, pension, etc. whereas you can only credit an NRE (Non-Resident External) account in foreign currencies, know about the NRE account.
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Ideally, on the other hand, your account can be converted into an NRO account, if you have a regular savings account in India before moving abroad. After one move overseas the account can be opened as well. There are some limitations to the NRO account in comparison to the NRE accounts and hence the NRE accounts are preferred over NRO accounts.
Who is eligible for opening an NRE account?
It can be opened by an NRI, a PIO (Person of Indian Origin), or an OCI (Indian Overseas Citizen).
Given below includes the list of advantages of having an NRE account.
- You can easily transfer the funds from one account to another be it an NRE account, or NRO account, or maybe the resident Indian account
- You will be able to open a bank account with a fixed or recurring deposit
- Mutual fund investments can be done in India through this account
- Interest earned on principal plus the principal amount is repatriable altogether
- The conversion of foreign currency to Indian currency for personal as well as business purposes
- There is tax exemption on the interest earned from your account according to the Indian tax laws
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The requisite documents needed for opening an NRE account includes-
- The recent copy of your passport
- A valid copy of visa from your passport,or NRI status copy, or your work permit letter
- Address proof of Indian address and Overseas address
- Copy of your Aadhar card and Indian PAN card or form 60
- 2 copies of recent photographs
- To maintain the monthly average minimum balance in the account, a minimum balance paycheck or draft (DD slip is mandatory for Draft) from your own account
- Your documentation and photographs can be self-attested or attested by the consulate in your country or a notary stamp or a banker overseas or the Indian embassy or
How can you open an Overseas NRE account?
Opening an NRE account online now is very easy, without having to visit the bank’s overseas bank or one in India. All the online facilities are provided by most public, private and foreign banks with operations in India for smooth functioning and minimum hassle. With the current situation of COVID-19 and increased competition, some private banks are even sending representatives to pick up documents for a free contactless service. Some of these private banks also provide wholly paperless services in certain jurisdictions.
Steps for opening an online NRE account?
- Filling the application on the respective bank portal. Make a note of the registration number and tracking ID to check your status of the progress of your application
- Make sure you have scanned copies of documents mentioned in the above list and any other documents required by the bank
- Print the application form and make the necessary signatures on the form, if required paste the photographs on the application
The process of application varies according to the bank. In some cases, the bank provides the address where you need to mail or courier the documents, or there are multiple collection boxes available to submit the application and the documents. There are few banks that give you the freedom to upload the original documents to their portal and then are verified by the concerned authorities. It is highly recommended to read all the instructions carefully to avoid any inconveniences.
Procedure to open an NRE account in India
If you want to open an account offline i.e. by visiting the bank of your choice, you just have to take the required documents (mentioned above) or check with the bank for the relevant documentation needed to open the account and then accordingly, open an account.
Through the process of digitization and improvement in the online banking sector, it has become a very easy task for all the bank users to open accounts from any place according to their convenience. The only advice which is the most important in the entire process is the checklist of the required documents, to ensure safety and security!