NRE vs NRO vs FCNR: which NRI account do you need?
Three bank accounts for Indians living abroad, each for a different kind of money. Here's the difference in plain words, which ones suit you, and how to open them.
The short version
NRE account
- Non-Resident External: for money you send to India from abroad
- Held in rupees; savings account or fixed deposits
- Interest is tax-free in India
- Money and interest can go back abroad freely
NRO account
- Non-Resident Ordinary: for rent, dividends, pension or sale money you earn in India
- Held in rupees; savings account or fixed deposits
- Interest is taxed in India (tax deducted by the bank)
- Up to USD 1 million a year can go back abroad, after tax
FCNR (B) deposit
- Foreign Currency Non-Resident: a fixed deposit in dollars, pounds, euros and other major currencies
- No savings account; deposits of 1 to 5 years
- Interest is tax-free in India, even in your RNOR years
- No currency risk, and money goes back abroad freely
Side by side
| NRE | NRO | FCNR (B) | |
|---|---|---|---|
| What money goes in | Money from abroad (salary, savings), or from another NRE or FCNR account | Income in India, plus money from abroad if you like | Money from abroad, or from an NRE account |
| Currency | Indian rupees | Indian rupees | Foreign currency (USD, GBP, EUR, CAD, AUD, JPY and others the bank offers) |
| Account types | Savings, current, fixed deposits (1 to 10 years) | Savings, current, fixed deposits | Fixed deposits only (1 to 5 years) |
| Can Indian income go in? | No | Yes | No |
| Tax on interest in India | None while you're an NRI | Taxed: the bank deducts about 31% (lower under a tax treaty) | None while you're an NRI or RNOR |
| Taking money back abroad | Fully, any amount | Up to USD 1 million per financial year, after tax, with Forms 15CA/15CB | Fully, any amount |
| Currency risk | Yes: a weaker rupee shrinks it in dollars | Yes | None: it stays in the foreign currency |
| Joint holder | Another NRI; a resident relative only as "former or survivor" | Anyone, including residents | Another NRI; a resident relative only as "former or survivor" |
| After you move back | Becomes a resident account, or the money moves to an RFC account | Becomes a resident account | Runs until it matures, then moves to an RFC or resident account |
"About 31%" is 30% tax plus cess, before any surcharge. Interest rates vary by bank: NRE deposits usually pay like resident rupee deposits; FCNR deposits pay less, because dollar rates are lower than rupee rates.
Which one suits you?
- You send part of your salary home to save or invest in IndiaOpen an NRE account. Tax-free interest, and you can take the money back any time.
- You have rent, dividends, a pension, or money from selling property in IndiaYou need an NRO account: Indian income can't go into an NRE account.
- You want to save in India without betting on the rupeeChoose FCNR deposits. Your dollars stay dollars, and the interest is tax-free in India.
- You live in the UAE or Saudi ArabiaThe dirham and riyal are pegged to the dollar, so a USD FCNR deposit works like keeping your savings at home. Few banks offer AED or SAR deposits.
- You plan to move back within a few yearsFCNR deposits keep their rate until they mature and stay tax-free in your RNOR years. NRE interest becomes taxable once you're resident.
- Not sure?Most NRIs open an NRE and an NRO account at the same bank, and add FCNR deposits for savings they may want in dollars later.
How to open one
Who can open them: Indian citizens living abroad (NRIs) and Overseas Citizens of India (OCI cardholders). Most banks open all three in one application, and many do it online with a video call for KYC.
- Choose a bank (see below) and start the NRI account application on its website or app.
- Keep your documents ready: passport; visa, work permit or residence card (or your OCI card); proof of your address abroad; PAN card (or Form 60 if you don't have one); a photo. You'll also sign a FATCA/CRS declaration about where you pay tax.
- Complete KYC: a video call with the bank, a branch visit in India, or copies attested by an Indian embassy, a notary or the bank's overseas office.
- Make the first deposit: for NRE and FCNR, send money from your bank abroad; for NRO, money can come from abroad or from India.
Living in the US or Canada? Because of US tax reporting rules (FATCA), some Indian banks don't open accounts online for US and Canadian residents, or offer fewer products. Check the bank's NRI page or ask before you apply.
Banks to compare
- State Bank of India The largest bank, with branches across India
- HDFC Bank Online opening, wide range of NRI products
- ICICI Bank Online opening, money transfer service
- Axis Bank Online opening with video KYC
- IDFC FIRST Bank Often higher savings rates
- Bank of Baroda Public sector bank with branches abroad
Listed for convenience, in no particular order; we have no arrangement with any bank. Compare interest rates, fees and money transfer charges before you choose.
When you move back to India
- Tell your bank once you've moved back for good. Under FEMA you become a resident from then, and you're no longer allowed to keep NRE and NRO accounts.
- NRE and NRO savings accounts are converted to ordinary resident accounts. NRE fixed deposits are usually allowed to run until they mature, but their interest is taxable from the day you become a resident.
- FCNR deposits can run until they mature, at the agreed rate, and their interest stays tax-free while you're RNOR.
- Keeping foreign currency: money from NRE and FCNR accounts can go into a Resident Foreign Currency (RFC) account, where it stays in dollars and can be used in India or abroad.
How long you'll be RNOR decides how long your income abroad stays untaxed in India. Check it with the RNOR status checker.
Questions
Can I have NRE, NRO and FCNR accounts at the same time?
Yes. Many NRIs hold an NRE account for money sent from abroad, an NRO account for income earned in India, and FCNR deposits for savings they want to keep in dollars or another foreign currency.
Is NRE interest tax-free?
In India, yes, while you are a non-resident under FEMA. Your country of residence may still tax it: the US, for example, taxes worldwide income, so NRE interest goes on your US return and the account may need to be reported (FBAR and FATCA).
Can I move money from my NRO account to my NRE account?
Yes, within the limit of USD 1 million per financial year for money taken out of NRO accounts, after tax has been paid on it. Banks usually ask for Forms 15CA and 15CB.
Can I pay less tax on NRO interest?
If your country has a tax treaty with India, the bank can deduct tax at the treaty rate (15% for US residents, for example) when you give it a Tax Residency Certificate and Form 10F. Any extra tax deducted can be claimed back in your Indian tax return.
What happens to my NRE, NRO and FCNR accounts when I move back to India?
Tell your bank when you move back. NRE and NRO savings accounts are converted to resident accounts. FCNR deposits can run until they mature, and the money can then go to a Resident Foreign Currency (RFC) account or a resident rupee account. NRE balances can also go to an RFC account.
Can a resident Indian be a joint holder of my NRE account?
Only on a "former or survivor" basis, with a resident close relative who can use the account only after the NRI holder dies. An NRO account can be held jointly with a resident in the usual way.