All you need to know about NRO and NRE deposits held by an NRI


It is quite common for people from India to go and settle abroad. Indian citizens who do so for employment or carrying out a business or vacation there or for any other purpose due to which their period of stay outside India is uncertain, would be considered (NRIs).

Nonetheless, many such NRIs prefer to retain the bank accounts they had held in India. This could be for easy repatriation of income made abroad to the home country. Or they might want to keep income earned in India in India itself. In such cases, one can either open a Non-Resident account or a Non Resident Ordinary rupee (NRO) account. Let’s understand these two accounts and their characteristics a little more in detail.

The need for an and account

First and foremost, one needs to understand that once an individual moves out of India, he is not allowed to hold a resident savings account. It would be considered as a violation of the Foreign Exchange Management Act or FEMA regulations. Hence, it is essential for an NRI to immediately re-designate his/her savings account as either an or an account by providing due intimation to the bank in this regard.


An NRE account is an Indian Rupee denominated account. Funds from abroad, say, income earned abroad can be periodically deposited easily into an NRE account in foreign currency. This gets converted to INR the moment the money is deposited to the account at prevailing exchange rates.

Further, you can also freely repatriate the funds in this account along with the interest without any hassles outside India. No limit has been prescribed to restrict the amount that can be repatriated from an NRE account. Moreover, the income earned from an NRE account is exempt from income tax.

Please note that an NRI can hold an NRE account jointly with another NRI only.

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