10 Best NRE Savings Accounts For NRIs

Non-Resident Indians (NRIs) who wish to have a savings account or a fixed deposit account in India cannot open a normal account like Indian residents. If you opened one when you were an Indian resident, before moving abroad, you need to convert it into an NRO account.

Depending on your necessity, you can choose between NRO and NRE account. It is illegal for an NRI to hold a residential account and it could attract huge penalties.

What is an NRE account?

An NRE Account is an account maintained by a Non-Resident Indian, where payments are credited only from outside India by way of drafts or RTGS. Withdrawals, however, can be made outside India or within India. The difference between a general S/B Account and an NRE Non-Resident External Account is that the account is held by a non resident, as against public Savings accounts which are managed by resident Indians internal payments can be made only from outside India.

The Reserve Bank of India had a few years ago lifted the interest rate cap on NRE FDs, which were linked to the LIBOR (London Interbank Offer Rate). The one good thing of the NRE Savings Account is that the interest income is tax free in the hands of the investors. This is true for NRE Savings Account as well for NRE Fixed Deposits.

Advantages of NRE Accounts

The advantage of having NRE accounts is income earned as interest is exempted from tax (no TDS deduction as in regular savings account which qualifies for TDS if interest income in a FY exceeds Rs. 10,000 from all the savings account with the bank). The funds are repatriable and can be sent to any country outside India.
The funds can be transferred from this account to an NRO account. However, it is advisable not to do so, given the fact that there is a TDS on interest rates on NRO accounts.

Difference between NRO and NRE Account

NRIs can open two types of accounts: NRO (Non-Resident Ordinary) and NRE (Non-Resident Rupee) account. NRO accounts are used to normally make payments locally and funds can be remitted from India (in rupees) or abroad. NRIs who are travelling abroad can convert their normal domestic account to NRO account. On the other hand, NRE account is maintained through remittances in foreign currency.

Another major difference is that NRE has tax advantages. No tax is deducted interest earned and principal amount from savings or NRE fixed deposit accounts. In the case of NRO account, there is a TDS that is deducted on interest income.

If you have a rented-out house in India, NRO is needed as you cannot deposit Indian rupees in an NRE account. If you make frequent transfers from India to abroad, NRE is a better option, as NRO has a limit on how many transfers you can make abroad.

Things to note while choosing the best NRE account

Look for a host of things. The first thing to look when opening the best NRE savings account is whether you can avail the service in the country of your residence. Check the interest rates also, as these are important if you have large sums of money. We have highlighted a few of the best NRE savings accounts. However, you should know that these could change over time, especially the interest and other facilities that these banks offer. In any case, here they go.

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