An NRI Account: Everything You Need to Know
When you move abroad, the Government of India mandates it to have a Non-Resident India (NRI) bank account to manage your savings. Whether or not you have earnings in a foreign country, you opt for an NRE or NRO account. The NRE stands for Non-Resident External, and the NRO stands for Non-Resident Ordinary. Both of these accounts serve different purposes. Before we get into the details and features of an NRE account, let’s understand why one needs an NRE/NRO account and the fundamental difference between an NRE and NRO account.

Why Does One Need an NRO/NRE Account?

The Foreign Exchange Management Act prohibits an NRI from having a savings account in any bank. They must have an NRE or NRO account, depending on their residential status. This is done by opening a new account or getting your savings bank account converted into an NRE/NRO account. The role of this account is to help you manage your savings and assets in India. It also makes transferring money from any bank to your Indian account hassle-free.

What is the Difference between an NRE and NRO Account?

If you live outside India but your sources of income are in India, you should opt for an NRO account. Whether your source of income is from tenants or freelance projects, an NRO account helps you manage your savings in India.

If you live abroad and have sources of income from different countries, or the country you now stay in, you should opt for an NRE account. The account automatically converts foreign currencies to INR whenever it is deposited. This account helps you manage all your savings in INR. You can even use an NRE account to invest in assets or the stock market in India.

In Short

When you move to another country, you must convert your savings to an NRE or NRO account. You should choose an NRO savings account, if your source of income is in India, and you must choose an NRE savings account, if you have income from foreign currencies.