Friday, July 17, 2015

Can NRI open more than one NRE or NRO Account?

Can NRI open more than one NRE, NRO or FCNR account with different banks?
Yes, an NRI can more open more than one NRE, NRO or FCNR accounts with different banks in India. I am not exactly sure if you can open two accounts with a different branch of the same bank, but multiple accounts can definitely be held with different banks. For example, many of my friends have NRE accounts with HDFC Bank, Kotak Mahindra and YES bank. They even have multiple accounts with same bank but account type is different. For example, you can open one NRE, one NRO and multiple FCNR deposits with HDFC bank.


Normally, your resident saving account is converted into NRO account once you become NRI. A person is said to be NRI from income tax perspective if he stays out of India for more than 180 days in a financial year. Once you become NRI, you should inform your bank about your residential status and they would change your resident saving account to NRO (Non-resident Ordinary account).



Why should you open multiple NRI accounts?

Well, there are two things on it, first is different types of NRI account and the second thing is the opening same type of NRI account with two different banks. As an NRI, you need at least two, NRE and NRO saving account. You should use NRE account to put your repatriable money i.e. money which is converted from foreign currency you have remitted or deposited via travelers cheque. Also, you can use this account to open NRE fixed deposit because no TDS is deducted for interest earned in NRE fixed deposit account as interest earned in this account is tax-free in India.


The only disadvantage of NRE account is that you cannot deposit your Indian income in this account e.g. income earned from house rentals, stock dividends and royalty, for that you need an NRO account. This account is pretty much similar to your resident saving account e.g. interest earned by NRO fixed deposits are subject to income tax and bank automatically deduct TDS.

The third type of account which is called FCNR (Foreign Currency Non Resident) accounts are totally different, they are actually foreign currency fixed deposit with Indian banks. NRI open this account to keep money in foreign currency and earn better interest rate because foreign bank usually provides very negligible to low interest rate on fixed deposit.

Since all three accounts server different need, you can open them depending upon your requirement and goal. See here for more differences between NRE, NRO and FCNR accounts.



Now coming bank to second question, should you open multiple NRI account of the same type with different bank? e.g. two NRE account one with HDFC bank and other with YES bank? My answer is Yes, you should, Why? because it happens sometimes that you forgot username, password of one bank or bank is not accessible due to technical reason or some of the bank functionality are not working e.g. registration of payee was not working for ICICI bank from last 1 week. In that case, if you have more than one account, you will not stuck.


Another reason for opening more than one NRE account is different interest rates offered by different banks. Since everybody wants better interest rates for their hard earned money. So, if you are putting large amount in NRE fixed deposit, you better open an account with the bank which is offering best NRE FD rates. Though you shouldn't get carried way and open too many accounts as it would be tough to manage and always remember, if you can't manage your account and money, you will lose them one day. There are huge amount of money lying in banks which are unclaimed because either their owner forget them or they are no more and no one from their family knows about that account.



Benefits of NRE Saving Account

Here is quick summary of  main benefits of NRE saving account for Non Resident Indians :


Can NRI open more than one NRE, NRO or FCNR account with different banks?


In short, Yes, you can open more than one NRI account with the different bank in India. You can even open a different type of NRI accounts e.g. NRE, NRO and FCNR with the same bank e.g. HDFC bank or ICICI bank. Ideally, you should have 2 NRE saving accounts and 1 NRO account which can be further used to create NRE and FCNR fixed deposits. BTW, don't open too many banks accounts it's not worth it. It's very difficult to manage multiple accounts, remembering the username, password, maintaining the minimum balance, there are so many hassles.   Just find a middle ground and open one or two NRE and NRO saving the account. Some new players in Indian banking industry e.g. DBS bank from Singapore has offered good interest rates too.

3 comments:

  1. Hi I am currently holding some NRI Fixed Deposits In a popular Nationalized Banks however due to the current
    Depreciation in Oil prices in the Gulf I would have to shortly return back to India due to lack of opportunity. In such case would it be possible to Transfer the NRI Fixed Deposits from this Nationalized Bank to another Private sector bank NRI account which is offering better Rate of Interest & returns. In short is it possible to Transfer funds between 2 different NRI accounts with 2 different banks.

    ReplyDelete
    Replies
    1. Yes, it's possible to transfer funds between two NRE accounts but you cannot transfer funds between NRO to NRE account without documentation.

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  2. Can NRI open more than one NRE account with same bank with different branches within city?

    ReplyDelete