An NRE account is maintained by NRIs to save in rupees.
NRI’s (Non-resident Indian) who wish to have a fixed deposit or savings account in India cannot open regular savings account like Indian residents. If you had opened an account when you were an Indian resident, before moving abroad, you have to convert it into a Non Resident Rupee (NRE) account or Non-Resident Ordinary (NRO) Account.
Depending upon your requirement, you can choose between NRE and NRO account. As per guidelines published by RBI, it is illegal to hold a normal resident account if you are an NRI.
An NRE account is maintained by NRIs (Non-resident Indian). People working abroad can transfer their earnings and hold them in rupees format. However, withdrawals can be made outside and within India. The fundamental difference between a general savings account and a Non-Resident External account is that a general savings account is held by the normal resident to use it within the country while NRE account is used by NRIs who earn outside the country and wish to deposit their savings in rupees.
The first advantage of an NRE account is that the interest earned is exempted from tax. (No TDS is deducted on interests on NRE accounts while TDS is deducted on savings account if the interest amount is more than Rs. 10,000 in a financial year). The funds deposited in this account are fully repatriable and can be transferred to any country in the world.
Kotak Bank offers three different types of NRE account that earns 4% interest p.a. The interest earned is paid quarterly or half-yearly. Interests on NRE fixed deposits are as high as 7.30% p.a.
1. NRE Rupee Savings Account:
– Average quarterly balance to be maintained at Rs 10,000
– The preferential foreign exchange rate for transactions above Rs 10,000
– Easy remittances to India by wire transfer or cheque
2. NRE Platina Saving Account
– A relationship manager dedicated to every account
– Global visa platinum card
3. NRE Mariner Saving Account
– Global debit card with up to 10 free non-Kotak ATM withdrawals
– Zero account opening fee for online investment[PC(BK1]
Axis Bank’s NRE account comes with a fully equipped account kit that includes a domestic cheque book and domestic titanium debit card. The holder additionally gets Rs 2 lakh accidental coverage for free. Minimum balance is to be maintained at Rs 10,000 for every account with Axis Bank. Account holders can earn interest up to 4% p.a. which is paid on a quarterly basis. It can be accessed through a mobile application or a secure net banking connection.
SBI has its presence in countries like US, UK, Canada, Middle East etc. An NRE account can be opened either singly or jointly with other NRIs. NRIs are supposed to maintain a monthly average balance of Rs 1000 at a rural SBI branch while for semi-urban and metro the minimum balance requirement stands at Rs. 2000 and Rs. 3000 respectively. SBI offers 4% interest on deposits beyond one crore and 3.5% on deposits up to one crore.
CitiBank provides banking services and products to NRIs. Initial money to open this account is set at $5000 or equivalent. An account holder gets a free platinum debit card. NRI customers can get interest up to 3.5% p.a. which is calculated on a daily basis and credited half-yearly in March and September. No TDS is deducted on interest credited to NRE accounts.
Deutsche Bank Value Plus comes with a complimentary international gold debit card with cash withdrawals, and point of sale limits up to Rs.25,000 and 1.5 lakh respectively. However, an account holder is required to maintain a minimum average quarterly balance of Rs 1 lakh in your savings account. Deutsche Bank offers NRE fixed deposits at 8.25% for deposits kept for five years.
It is illegal to hold normal savings account in case you are an NRI. An NRE account is to be maintained by an NRI in which payments coming from outside the country can be credited using drafts or RTGS. This account is tax heaven as no TDS is levied on interest earned against deposits. Banks like Kotak Mahindra offer interest up to 4% p.a, which is credited quarterly or half yearly.
Click here to compare different NRE Accounts.
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