When it comes to banking scenarios and practices of our country, there are even provisions for a Non-Resident Indian (NRI) to operate and manage their finances while sitting abroad. In the context of NRI banking, there are two categories of savings bank account through which the transactions are carried forward. When you are staying in a foreign land and working over there, a Non-Resident Rupee (NRE) account enables you to transfer your fund in Indian currency with complete security. On the other hand, the Non-Resident Ordinary Rupee (NRO) account empowers an NRI to manage their income earned in India like pensions, rents, dividends, etc to be operated smoothly. Both these accounts comprise the system and proceedings of NRI Banking.
The provision and privileges offered through NRI banking make it more transparent and flexible for customers staying abroad. Standard Chartered NRI accounts have some best deals and offer exclusively meant for people staying abroad.
Features and best practices involved in NRI banking
Tax Benefits: The prime benefit that an NRI can avail in an NRE account is the tax exemption. The savings bank account and fixed deposit account in NRE, both get tax benefits on the interest accrued on it over a period of time. However, in NRO savings bank account and NRO fixed deposits, the interest is subjected to a tax deduction as per the law of Income Tax Regulation. There is also a facility of transferring the funds from an NRO account to an NRE account after making the necessary payments of the applicable taxes.
Minimum Balance Requirement: In the growing edge of competitiveness, all the banks are geared up to offer attractive schemes and policies to an NRI account holder. This has dragged down the minimum balance requirement significantly. There is no obligation to maintain high deposits in an NRI or NRO accounts. Most of the banks nowadays, just require Rs.10,000 as minimum balance deposit to maintain these accounts.
Reparative Advantages: This has been another key advantage in an NRI banking system. The NRE and NRO accounts enjoy repatriation benefits which allow swift movements of funds. There is provision to transferring both the principal amount and interest amount abroad. Fund transferring in the NRE account is completely free and repatriable whereas, in the case of the NRO account, it is only possible after the payment of the applicable taxes.
Convenience Benefits: Well, as banking is constantly changing, it is been designed to make it more convenient for the customers. One such advantage for the NRI account holders operating from abroad is the convenience benefit where opening an account in the desired bank becomes easy without even visiting the branch physically. Commercial banks give facilities to open an account by filling a form online, taking a printout, attach a copy of the required documents with self-attestation and finally couriering it to the bank in India. These facilities are available to the customers of both NRE and NRO account holders.
FCNR Deposits: Besides getting the opportunity to earn interest in an NRE/NRO savings account and NRE/NRO fixed deposit account there is another way to accrue interest by booking Foreign Currency Deposit (FCNR). So now that you are aware of it, you can book this FCNR deposit scheme and earn interest on foreign currency. The interest earned on these foreign earnings is exempted from tax deductions.
Joint Holding: Another provision in an NRE/NRO account is that you can appoint a joint holder to manage and operate your funds. The benefit is that your partner, parents, or children can also get access to operate it independently without requiring permission to withdraw money. Though there are benefits it can be risky at times. Now the best way to manage a joint account is to get the signature of both the account holders for withdrawing money or making other decisions related to banking. This is also important in times for claim settlement in case of the death of the account holder, which otherwise can attract unnecessary hassles.
Mandate Holding: Another unique facility provided in NRI banking is the mandate holder feature through which you can appoint a mandate to operate the account on your behalf. This allows smooth functioning and monitoring of the bank account while the NRI stays abroad. Through the authorization of a mandate, he is able to conduct the day to day banking activities like making local payments through drawing cheques, invests in various projects and schemes, make and renew fixed deposit policies, etc. There are some banks that even give an ATM card and checkbooks to the mandate holder.
Investment Benefits: There are certain banks that offer lucrative schemes for NRI account holders and provides them with an option to invest in mutual funds by establishing a link between their NRE/NRO savings account to an investment savings account.
Now NRIs can take advantage of the best practices of NRI banking services in India. Whether opening an NRE or NRO account, it entirely depends on the discretion of the earnings made by these NRIs.