A Knowhow On NRI Banking

Banking is essential since it allows one to the easy way to manage one’s wealth. It is there to keep business flowing in a smooth manner. Non resident Indians are people of Indian origin who live outside India. Such people always look to invest in their mother land and hence require banking support.

When the global down turn hit a while back, Indian markets were not as affected due to a very effective banking structure in India. Thus, India has shone through even the BRICS nations as the most positively growing nation. NRIs are investing in a plethora of activities such as mutual funds, equities as well as real estate. A Non Resident Indian can keep money in India through two different types of accounts – one is an NRE or Non Resident external Account or an NRO or a Non Resident Ordinary account.

A NRE account can be accessed by depositing money at the outset in a foreign currency to initiate the account. The currency to open the account could be in the nature of notes or traveller’s cheques. These accounts are flexible enough to allow nominations and also while keeping funds in Indian rupees. The interest earned from such accounts is tax free while allowing easy fund transfer across nations. It allows simple hassle free repatriation of both interest and principal sums to the foreign country of choice. They can also be held together with NRIs.

There are banks which also allow one to have foreign currency non resident deposit accounts. The amount kept in such accounts is protected against rupee’s struggle by keeping the amounts in foreign currency or USD. Further, here interest can be accumulated and encashment may be received bi-annually and the sales occur at maturity. Further, joint accounts with very close relatives may not always be a smart movie since they can then only be executed in “Former or survivor” basis.
An NRO account is a Non Resident Ordinary account refers to the regular vanilla account opened. The process allows one to store funds in India by transferring money from home nation or even from other NRO accounts. It is similar to NRE except for the repatriation which needs RBI reporting in prescribed government forms.

Funds from local or overseas sources which would need to be sent abroad have the option to be stored in NRE accounts. This benefit is however not there for NRO accounts. Funds transfer from NRO to NRE is also restricted.

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