Why To Open NRI Bank Account in India?

Busy in packing your luggage?

Excitement to study or work abroad lets you walk in the air. Of course, you would be ready with your immigration papers.

Halt! Have you winded up your other bank accounts? Have you opened a non-resident bank account?

These are the basic requirements that a non-resident has to fulfill. These are the strict instructions issued by the Reserve Bank of India (RBI). First and foremost, you must know about the NRI account.

Walk through this description to determine about this significant NRI service. It would prove crucial information to bear in mind while think about immigration.    

What is NRI account?

It’s a mandatory service of fund deposition. The expats or non-residents of India (NRIs) can deposit their funds with any financial institution that is deemed by the RBI. This apex finance governing entity of India mandates opening NRE (or Non Resident External Account) or NRO (Non Resident Ordinary Account) to save & manage their earnings here. These are a kind of saving accounts. The money is fully repatriable in the NRE accounts whereas the NRO account is non-repatriable generally. Many reputed banks are here that provide this facility of the NRI account as SBI, HDFC and so on.

Besides these, the NRI diaspora can also open FCNR (Foreign Currency Non-Repatriable Account). As its name depicts, the Indian expats can’t manage their earnings as they do in the saving account. Neither can they repatriate their hard-earned money.  Therefore, the immigrants prefer to deposit their earning in the best bank for the non-resident account. They sift through the excellent one that is secure, reliable and authentic. They consider that offers the highest return on investment.     

Repatriation can be identified as a vital ability of moving from one country to another country. The money is an asset that expats tend to transfer from abroad to their relatives and family members. 

Let’s drill into the fact why the NRIs like to open the bank account in India.

Why do expats like to open bank account in India?

1.       Higher rate of interest:

The foreign banks generally offer marginal interest rate. Let’s say about the US. The banks here provide just 0.03% of the overall deposited amount. On the flip side, Indian banks like to attract the expats for the investment. Therefore, they offer fairly higher interest rate. If you look at the SBI, it provides upto 6.25% interest over the deposits below 1 crore. This is why the immigrants with Indian passport love to open a bank account here. But they must nail these facts in their mind:

·         Compare and then deposit in the bank that is affiliated to the RBI. If the interest rate on the NRI account is more or less equal in all indigenous banks, thoroughly observe the incentives. However, most of the banks don’t prefer offering any incentives to any migrant. But you do go through all such aspects.

·         Keep an eye on the inflation rate pervasive here. A spike in the inflation rate can narrow the profit margin over the higher rate of interest (as compared to the US or other European countries).

·         The currency value fluctuates. Sometimes, this fluctuation creates a wide rift between the US dollars and Indian rupees. So, be aware of it.

·         If you don’t have any intention to resettle in India, it’s better to invest in the resident country (where you live).    

2.       Saving tax:

·         The tax regulation clearly states that the non-residents need not pay tax over the income earned outside (in foreign) the country (India). No tax would be levied over the interest earned on the NRE and FCNR account. But yes, the interest earned on NRO deposits would be taxable.

·         The FATCA-CRS agreement has mandated that the expats must unfold A to Z of their assets and income. Be it in the foreign or in here, the revelation is compulsory. It implies that they have to disclose wherever they have parked their earning.

·         This CRS agreement also enforces the non-residents to uncover the tax details of their NRI accounts. Whether or not the amount is small, the disclosure is compulsory.  

·         Those who don’t claim a tax residency certificate, such expats have to pay 30% TDS on the NRE account.  

3.       Easy to transact & money availability 

·         Most of the residents take a flight to the foreign country for earning livelihood. They frequently send a big share of their foreign income to their relatives in India through financial conduits. However, the KYC and other paper works are exponentially increased. But their money transfer is still on the rise.

·         Their fund-accumulation in the indigenous banks helps them exchange the foreign currency in a jiffy. The money exchange services in India have been increasingly fostering for several years. So, they can withdraw their own money while being visited in their home town.  

4.       Repatriate pension from India:

·         As stated above, the foreign residents with the passport of this country can enjoy the repatriation. They can move their pension money via the NRO account only. This is what the RBI rule reads.

·         But as per a notification by the RBI (dated on September 28, 2002), if they provide an appropriate certification by a Chartered Accountant, they can get repatriation of their pension, interest, rent, dividend etc.. The certificate must certify that the amount proposed is eligible for remittance since the appropriate tax has been paid.

5.       Remittance:

·         The FEMA (Foreign Exchange Management Act) allows outward remittance. If you want to get your money after selling the property in India, you can get it transferred wherever you want. But it would require the NRO account.