Most NRIs will have savings and income in foreign currencies like euros, dollars, pounds, etc. They need a banking account that can meet all of their needs because a great number of people like this have banking and investing needs in India.
For these people, several financial institutions, such as banks (FI) in India, provide the option of opening an NRI account. These accounts offer services for taxation, currency exchange, remittances, etc. But hold up! What is NRI? Let’s find that out first.
Who Is an NRI?
If you don’t know ‘who is NRI’, learn now before you open an NRI account. They are Non-resident Indians who leave their nation (India) to work in some offshore country. Let’s say you spend over 120 days a year living abroad. Also, you stayed in India for less than 365 days in the last four years. In that case, you’ll be eligible to open an NRI bank account.
NRI Account Meaning
NRI accounts are savings or current accounts opened by NRIs or Non-Resident Indians with banking institutions authorised by the RBI to offer a range of NRI services. You can choose from the following NRI Account kinds to fulfil your financial needs.
- Non-Resident Ordinary (NRO) Accounts
- Non-Resident External (NRE) Accounts
(Tip: Most NRIs open this type of account. So, check the NRE account meaning on the later post)
- Foreign Currency Non-Resident (FCNR) Accounts
You can open any of these NRI accounts at the IDFC FIRST Bank. Their attractive interest rates and range of account opening services will simplify your NRI account opening process. So, now that you know the ‘NRI account meaning’ and ‘where to open one,’ let’s uncover why you need one:
Why Do You Need To Open an NRI Account?
Enables The Purchase Of Financial Instruments
One of their main advantages is the ability to engage in stock market trading and various investment plans through NRI accounts. These investments are made possible by banking institutions’ Portfolio Investment Scheme (PIS) or NRI Portfolio Investment. It is an RBI program that enables NRIs to trade in debt or equity financial products like corporate debentures or market-linked financial instruments like equity shares via their NRI accounts.
According to the Income Tax Act of 1961, those with NRE and FCNR (B) accounts can take advantage of interest gains on tax-free deposits. However, according to the Union Budget 2020 proposal, if an NRI doesn’t have a tax duty to any other country, such overseas earnings would be taxed in India under their citizenship or residency.
NRIs who decide to put their money in a fixed deposit account, such as an FCNR or an NRE FD, reap significant returns on their overall deposits with minimal risk because these accounts are unrelated to stock market volatility.
Keeping You Away From Exchange Rate Volatility
People can deposit their foreign-sourced income in an FCNR without converting it into Indian rupees. With this tool, NRIs can prevent changes in the exchange rate and the ensuing decline in the value of their deposits.
Against the security of the funds placed in the NRI account, the authorised bank/FI may grant loans in India to the owner of the NRI account or any other third party. All forms of funding, whether fund-based or not, would be referred to as loans.
So, NRIs can easily handle fund transfers from outside India using NRI Accounts and handle their funds more effectively. Open your NRI Account with the best bank, IDFC FIRST today!