Understanding Types of NRI Accounts and Deposits

Get to Know about Types of NRI Accounts and Deposits
April 5, 2024
min read

Managing funds at home while staying overseas poses particular difficulties and considerations for Non-Resident Indians (NRIs). Understanding the types of NRI accounts and deposits that are available to NRIs is an essential part of evaluating one’s financial situation and can help in further decision-making. 

In this blog, we will discover the types of NRI accounts in India and explore the intricacies of these accounts and deposits, thereby offering NRIs the information they need to manage their money wisely.

1. NRE (Non-Resident External) Account 

NRIs frequently deposit their foreign earnings in India using NRE accounts. These types of NRI accounts permit free fund transfers and are valued in Indian rupees. 

One of their main benefits is that the principal and interest are entirely repatriable. This allows non-resident Indians (NRIs) to easily transfer money and interest-bearing amounts overseas without restrictions.

2. Non-Resident Ordinary (NRO) Account 

For non-resident Indians (NRIs), the NRO account is a central location for managing their income from sources like -

  • Dividends
  • Rental income 
  • Pension payments. 

In contrast to an NRE account, where funds are not readily repatriable, fund transfers overseas are restricted in an NRO account. 

However, after complying with specific regulatory requirements, NRIs can repatriate up to USD 1 million per financial year from their NRO account.

3. Foreign Currency Non-Resident (FCNR) Deposit

This type of NRI account offers flexible currency options. A term deposit account denominated in foreign currency enables non-resident individuals (NRIs) to retain their overseas earnings in India without being exposed to exchange rate changes. 

It offers multiple currencies, such as USD, GBP, EUR, or JPY, with fixed deposit durations ranging from one to five years. The principal amount and interest gained on FCNR deposits are entirely repatriable, and the interest is tax-free in India.

4. Resident Foreign Currency (RFC) Account: 

This account type is intended for people who meet residency requirements yet have foreign currency earnings, such as NRIs returning to India permanently.

It facilitates a smooth transition for those returning to the nation by enabling NRIs to keep foreign exchange funds in India. RFC accounts allow you to keep money in foreign currencies and guarantee principal and interest repatriation.

Selecting a Suitable Account That Works For You

 These must be considered when choosing the right NRI account:

  • Type of income 
  • The need for repatriation 
  • Preferred currencies 

Understand your needs. After evaluating the different types of NRI accounts, NRIs must also choose an account based on their financial objectives, risk tolerance, and regulatory requirements. 

Speaking with a banking representative or financial counselor can offer insightful advice specific to each person's requirements and situation.

Regulatory Compliance Around NRI Accounts

When managing their NRI accounts and deposits, non-resident individuals (NRIs) must adhere to the regulatory requirements established by the Reserve Bank of India (RBI) and other regulatory bodies. 

To avoid any legal or financial ramifications, it is imperative to comprehend the regulations pertaining to: 

  • Repatriation restrictions 
  • Taxation 
  • Documentation requirements. 

Seeking professional guidance and staying abreast of regulatory updates ensures compliance and keeps financial anxiety at bay.

Tax Implications Around NRI Accounts 

Non-resident Indians (NRIs) who own NRI accounts and deposits need to consider the tax implications of doing so. Even while interest on NRE and FCNR deposits is tax-free in India, income from NRO accounts is still subject to income tax laws in that country. 

In their home countries, NRIs could also be subject to taxes, depending on local regulations and bilateral tax agreements. Consulting with tax experts can help you navigate the challenges of cross-border taxation. 

Risk Management and Diversification

You can reduce risks and maximize rewards by spreading assets throughout several NRI accounts and deposit types. 

NRIs can manage their liquidity demands, regulatory compliance, and currency risk by distributing cash among their NRE, NRO, FCNR, and RFC accounts.

Furthermore, considering non-traditional deposit investment possibilities like mutual funds, stocks, or real estate can improve long-term wealth building and further diversify the portfolio.


It takes careful thought and in-depth analysis of the available options, regulatory constraints, and tax ramifications to navigate through the different types of NRI accounts and deposits. 

Through prudent account selection, adherence to guidelines, and asset diversification, non-resident individuals can proficiently handle their funds and accomplish their financial objectives. 

NRIs can ensure their financial future and make educated decisions no matter where they are by seeking advice from financial specialists and keeping up to date on market trends and regulatory updates.


1. Can NRIs open a regular savings account in India?

NRIs can open regular savings accounts in India, known as NRE or NRO accounts. NRE accounts hold repatriable funds, while NRO accounts manage non-repatriable income earned in India, offering various banking services.

2. Are there any restrictions on the types of deposits that can be made into NRI accounts?

Deposits into NRI accounts are restricted. NRE accounts accept freely repatriable funds in foreign currencies, while NRO accounts receive income generated in India, including dividends and rental earnings. FCNR deposits allow NRIs to hold foreign currency savings in India.

3. Can NRIs invest in fixed deposits or term deposits in India?

Yes, NRIs can invest in fixed deposits or term deposits in India through FCNR and NRE accounts, which offer attractive interest rates. However, NRO fixed deposits are taxable in India.

4. Are there any specific requirements or documentation needed to open NRI accounts and deposits?

Specific documentation, including proof of NRI status, address proof, photographs, and PAN card, is required to open NRI accounts and deposits. Requirements may vary among banks.

5. How are the interest rates for NRI accounts and deposits determined?

Interest rates for NRI accounts and deposits are determined by market conditions, RBI regulations, and account types. Banks may offer competitive rates to attract NRI deposits, with rates influenced by deposit duration and currency denomination. NRIS should compare rates across different banks and deposit options.

6. Who is eligible for NRI quota?

Eligibility for NRI quota varies depending on the educational institution and the specific program. Typically, NRIs, Persons of Indian Origin (PIOs), Overseas Citizens of India (OCIs), or foreign nationals can apply under the NRI quota for admissions in educational institutions in India. However, exact eligibility criteria may differ among institutions.

7. What is the fee for NRI quota in India?

The fee for NRI quota seats in India varies widely across different colleges and universities. Generally, NRI quota fees tend to be higher than those for regular Indian students. The exact amount can range significantly depending on factors such as the reputation of the institution, the demand for the course, and additional amenities provided to NRI students.

8. What is the benefit of NRI quota?

The benefit of the NRI quota is that it offers reserved seats for NRIs in educational institutions in India. This facilitates access to quality education for NRIs, PIOs, OCIs, and foreign nationals who wish to study in India. It provides an opportunity for them to pursue higher education in their home country or in a country with cultural ties, potentially fostering a deeper connection to India.

9. Is NRI quota expensive?

The NRI quota is generally considered more expensive compared to seats allocated under regular quotas for Indian residents. This is because NRI students often pay higher fees, which can include additional charges or donations required by institutions. However, despite the higher cost, the NRI quota provides access to educational opportunities in India, which may be valuable for individuals seeking to study in their home country or with ties to India.

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