What is an NRE Savings Account & How much interest can it generate for NRIs.

As per the Foreign Exchange Management Act, 1999 (FEMA), an NRI is defined as person resident outside India who is either a citizen of India or is a Person of Indian Origin (PIO). Of all the things that NRI must oversee, one of the main things is opening a bank account. To curb your money-saving or transfer of funds issue, banks in India allow you to open NRE account. Let’s get to know what an NRE account and how much interest rate you can generate from it.

What is NRE account?

A Non-Resident External or NRE savings account is targeted for NRIs looking to park their income earned outside India. The denominations are maintained in rupee. The income which you can from outside India can be parked in this account if you are staying overseas for employment, business, studies, or any other purpose. Before saving, you need to convert foreign currency. Through this account, you can easily transfer money from your residence country to home country.  As an NRI, the principal and interest amount are not taxable.

Let’s take a look at some of the features of the NRE account:

  • The principal amount deposited in your account and the interest you earn on your deposit is tax-free in India
  • You can access your account from anywhere around the world
  • Funds are fully and freely repatriable. Also, there is no restriction for transferring funds abroad
  • You also receive international ATM-cum-Debit Card
  • You can easily send money to India from NRE account to NRO account in India
  • You can open an individual account or open the NRE Joint Account with another NRI friend or relative
  • You can assign a Mandate Holder, who can be a family member residing in India. This helps the mandate holder to get access to your account anytime, anywhere through cheque book or mandate card received from the bank
  • You can access your account from anywhere around the world

How much interest rate you can generate?

You can maintain an NRE account in the form of savings or deposit account or both. Several banks calculate nre savings account interest rates based on the balance available in the account at the end of the day. The interest rates are different at different banks offering NRI banking solutions. Most interest rates for NRE savings account begin from 3.5% per annum. If you are looking to earn higher interest on your savings, then you can opt for an NRE Fixed Deposit account.

Any NRI, PIO, Student or Seafarer can open an NRE account. Those NRIs who are looking to save money in INR, and you expect to repatriate millions of dollars to your home country, then opening an NRE account would be an ideal choice.

If you are looking to open an NRE account, below are the details regarding the documentation process:

  • Passport
  • Residence Visa or Residence Permit or employment visa or Visa work permit
  • PAN Card Copy or Form 60
  • FATCA or CRS Declaration
  • CKYC Annexure
  • Address proof
  • Funding from customer’s self KYC complied account through cheque, DD, inward remittance (wire, vostro, M2I) is mandatory.

You need to submit the photocopies of the above documents that require self-attestation i.e the signature of the applicant as well as attestation by a Banker / Notary / Embassy official / Consulate Official.

Keeping the above features of an NRE account, you can easily open an account online.