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NRE Account Vs Normal Savings Account
Posted on Monday, December 11th, 2023 | By IndusInd Bank
RBI’s FEMA regulations restrict NRIs from using traditional savings accounts and mandate the use of specialized NRE accounts to manage foreign income in India. Unlike regular savings accounts, the NRE account allows foreign currency deposits, full and free repatriation of funds, and is tax-free. With IndusInd Bank’s hassle-free, easy online savings account, NRIs can manage their NRE savings accounts from anywhere in the world.
A savings account is key to managing personal finances effectively. It offers a secure place to park your money even as it allows you to earn an attractive interest on it. Being highly liquid, a savings account allows individuals to access funds as and when they should need to. However, for Non-Resident Indians (NRIs), a traditional savings account is not an option they can avail of.
The Reserve Bank of India (RBI)’s Foreign Exchange Management Act (FEMA) restricts NRIs from using resident bank accounts. NRIs need specialized Non-Resident External (NRE) savings accounts to enjoy the benefits of a regular savings account along with the repatriation of funds.
What is an NRE Savings Account?
NRE savings accounts are specialized rupee-denominated bank accounts designed for NRIs to deposit their earnings in a foreign currency. These accounts, maintained in INR, are fully repatriable, allowing both the principal and interest amount to be transferred outside the country without any restrictions.
NRE account holders can also make physical foreign currency deposits during a visit to India through cash, bank drafts, personal cheques, or travellers’ cheques. Funds held in an NRE account can be withdrawn for local disbursements, equity investments, remittances outside India, buying immovable property, or transfers to another NRE or Foreign Currency Non-Resident (FCNR) account.
Additionally, the interest earned on these accounts is fully tax-free under Section 10(4)(ii) of the IT Act.
Difference Between NRE Accounts and Savings Accounts
| Basis | NRE Savings Account | Traditional Savings Account |
| Purpose | Designed exclusively for NRIs to manage overseas earnings and easily repatriate funds to India. | Used by residents for regular savings and day-to-day transactions. |
| Deposit Currency | Account holders can deposit their foreign currency earnings into the NRE account. However, the account is maintained in INR. | Account holders can only make deposits in INR. |
| Tax Implications | All deposits, including principal and interest components, are entirely tax-free. | Interest earned up to INR 10,000 is exempt from tax under Section 80TTA of the Income Tax Act. |
| Joint Accounts | NRIs can open a joint account with another NRI, PIO, or a resident Indian on a Former or Survivor basis. | Only resident Indians are eligible to open a joint account. |
| Repatriation | Funds from the account can be easily transferred to the account holder’s country of residence without restrictions. | Outward remittance is only allowed for certain specific reasons approved under FEMA. These include education, medical treatment, foreign travel, immigration, personal gift, and so on. |
Key Features of IndusInd Bank NRE Savings Accounts
IndusInd Bank presents an NRE account packed with an array of attractive features, making it the best NRE savings account in the country:
- Low Minimum Balance Requirements
IndusInd Bank’s NRE account has a low average quarterly balance requirement of INR 10,000 for A and B category branches and INR 5,000 for C and rural category branches.
- International Debit Card
Access your NRE account from India or abroad anytime with a global debit card.
- Free Cheque Book
Use your chequebook for transactions in India without any extra charges.
- Omnipresent Banking
Avail of the best-in-class digital banking experience through a multitude of channels – net banking, mobile banking, video branch, and WhatsApp banking.
- High Interest Rates
Enjoy high NRE savings account interest rates
- Repatriate Funds
Both the principal and interest amounts are fully and freely repatriable.
Manage Your Foreign Earnings in India Conveniently with IndusInd Bank
NRE accounts are the gateway to managing foreign income in India without the restrictions of a traditional savings account. They provide NRIs with a secure and lucrative avenue to channel their overseas earnings, fostering seamless financial management across international borders.
IndusInd Bank’s feature-rich NRE savings account allows NRIs to manage their funds across borders with easy and free fund repatriation, competitive interest rates, omnipresent banking experience, and tax exemption. Open your account online to experience the convenience of an easier, hassle-free process from anywhere in the world.
Disclaimer: The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. Hence, you are advised to consult your financial advisor before making any financial decision. IndusInd Bank Limited (IBL) does not influence the views of the author in any way. IBL and the author shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information.
