NRE & NRO Account: Meaning, Differences, Benefits, Rules - SC India (2024)

Having an NRE or NRO account is necessary if you want to invest money in India or to collect the income generated in India in INR once you become an NRI.

Benefits of NRO Account of Non-Resident Ordinary Rupee Account

NRO (savings/current) account can be opened for the purpose of putting through bona fide transactions denominated in INR.

When you inform your bank about your NRI status, your bank can convert your existing Savings or Current account to an NRO account (Non-resident Ordinary Rupee Account) on submission of required documents Following are some information regarding the features, benefits, and advantages of an NRO account:

1. You can deposit any savings that you had before moving to another country into this account. Similarly, you can deposit your earnings from other sources in India such as rents, dividends, etc., and also transfer funds from your NRE account or transfer funds from overseas to this account. Thus, this account is best suited for Indians who had earnings and assets in India before moving to another country.
2. You can also open a joint NRO account with a resident Indian on former or survivor basis. Additionally, with banks such as Standard Chartered, you can mandate a resident Indian (give the power of attorney to a person resident in India) to help you carry out all the banking and account-related activities for your NRO Account.
3. Balances in NRO account cannot be repatriated abroad except by NRIs and PIOs up to USD 1 million

Benefits of NRE Account or Non-Resident External Rupee Account

An NRE account is used to deposit funds generated from foreign countries back to India. Following are some information regarding the features, benefits, and advantages of an NRE account:

1. Funds in your NRE Savings account are fully repatriable. You can freely move funds (both, principal and interest amount) from India whenever you want.
2. The interest earned on the funds in your NRE account will not be taxable in India, giving you more economic control over your financial wealth. However, you may or may not be taxed for this interest in your country of residence based on the prevailing taxation rules in that country.
3. Similar to an NRO account, an NRE account is maintained in Indian Rupees. This account can be primarily used for crediting funds transferred from your overseas account.
4. Similar to NRO accounts, you can mandate a resident Indian for your NRE account with banks such as Standard Chartered. However, you can open a joint NRE account only with an NRI or a resident Indian relative. *
5. If you link your NRE account with an investment & trading account, you can easily invest money in Indian investment instruments.
6. The ability to withdraw your funds from the NRE account any time using the international debit card is an added advantage.

Difference Between NRO and NRE Accounts

Why Open an NRO Account?

Opening an NRO account will allow you to:

1. Deposit your savings and earnings from Indian sources such as rent, pension, interest, etc.
2. Repatriate your Indian earnings (up to 1 million USD per financial year) to your country of residence
3. Provide a mandate to a resident Indian family member so that the funds are easily accessible to your family members back in India

Why Open an NRE Account?

Opening an NRE account will allow you to:

1. Send your overseas funds to India and hold the funds in Indian Rupees
2. Freely repatriate funds without any restrictions
3. Easily invest money in Indian investment instruments
4. Provide a mandate to a resident Indian family member so that the funds are easily accessible to your family members back in India

Standard Chartered provides a suite of products and best banking experience to your requirements, needs and aspirations as a Global Indian. Explore the full range of products here.

References:

1. https://m.rbi.org.in/Scripts/FAQView.aspx?Id=52
2. https://www.rbi.org.in/scripts/FAQView.aspx?
3. Id=23https://rbi.org.in/scripts/BS_ViewMasCirculardetails.aspx?id=9885#a5
4. https://www.rbi.org.in/scripts/FS_FAQs.aspx?Id=52&fn=5
5. https://m.rbi.org.in/Scripts/BS_ViewMasDirections.aspx?id=11200

*As per Section 2(77) Companies Act 2013

”relative”, with reference to any person, means anyone who is related to another, if–

• they are members of a Hindu Undivided Family;
• they are husband and wife; or
• one person is related to the other in such manner as may be prescribed;

The list of prescribed relatives is as follows:

A person shall be deemed to be the relative of another, if he or she is related to another in the following manner, namely:-

(1) Father: Provided that the term “Father” includes step-father.

(2) Mother: Provided that the term “Mother” includes the step-mother.

(3) Son: Provided that the term “Son” includes the step-son.

(4) Son’s wife.

(5) Daughter.

(6) Daughter’s husband.

(7) Brother: Provided that the term “Brother” includes the step-brother;

(8) Sister: Provided that the term “Sister” includes the step-sister.

All products and services availability is subject to the Bank’s internal cross-border guidelines.