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Can an NRI Deposit Money into a Normal Savings Account?

The moment you gain an NRI status, your life drastically changes, and so does the way you manage your finances. You are introduced to several new rules regarding personal finance, one of which includes changing your bank accounts.

As per FEMA regulations, an NRI or PIO cannot operate a normal savings account in their name in India. You must convert your bank accounts to a Non-Residential External Account (NRE) or Non-Resident Ordinary (NRO) account. Otherwise, continuing to operate a savings account can result in hefty penalties.

Both an NRE and NRO savings account help manage your foreign and Indian earnings conveniently. Here’s all you need to know about NRI bank accounts.

Non-Resident External Account (NRE)

An NRE account is a rupee-dominated account where you can deposit your overseas income in foreign currency, converted into INR. As an NRI, you can open an NRE account in the form of savings, current, recurring, or NRE fixed deposits.

With an NRE account, you can transfer your funds – principal + interest – without any restrictions. In addition, it is a tax-free account with all the features of a normal savings account to make personal and business banking much more convenient for you.

You can make payments or withdraw funds using your debit card or even invest in various mutual fund schemes in India by linking them to your investment account. What’s more, an NRE fixed deposit also lets you invest your foreign earnings in the Indian rupee with attractive returns.

Non-Resident Ordinary Account (NRO)

An NRO account is another bank account available to NRIs where you can deposit and manage your income earned in India. This includes sources like rent, interest, pension, dividends, etc. It works similarly to an NRE account, where you can transfer foreign currency earnings and open an account in the form of savings, current, or fixed deposits.

However, unlike NRE bank accounts, NRO account is not exempt from tax laws. And neither allows free and full repatriation of your funds. With an NRO account, you can repatriate the interest amount freely, while you can only remit a maximum of $1 million in a financial year. Moreover, your funds are also subject to tax based on your income tax bracket.

How to Convert Your Regular Account to an NRI Account?

You must inform your bank holding your regular savings account that you will be moving abroad and wish to convert your bank account into an NRE or NRO account. Next, follow these steps to get started-

  • Download and complete the application form online
  • Attach photographs
  • Attach self-attested copies of the passport with your personal and passport details
  • Enclose a valid copy of your Visa/ Work permit/ Resident permit
  • Attach a copy of PAN or Form 60 (in the absence of PAN)
  • Enclose a copy of your mailing address (Indian or overseas), as mentioned in the application

And done. You can submit the application along with documents at your nearest bank branch.

Over to You

Once you gain an NRI status, managing your finances can get overwhelming as you adjust to a new life. But with NRO and NRE accounts, you can keep your funds secure with savings accounts and NRE fixed deposits and make the most of your earnings in India and abroad.