As a Non-Resident Indian (NRI), there are various avenues you can choose from to earn good returns on your deposited funds. Non-Resident External (NRE) accounts and Non-Resident Ordinary (NRO) accounts have been exclusively designed for NRIs and feature multiple benefits. 


Find out more about both types of accounts and their respective features and benefits, along with their differences and more in the following sections.

Differences between NRE and NRO Accounts

The following are some of the major differences between an NRE and an  NRO account: 


NRO Accounts

NRE Accounts


NRO accounts are taxed as per the Indian legislation, under the Income Tax Act, 1961. Interest earned in such accounts may be taxed at around 30%. 

NRE accounts are not taxable, either on the principal amount or the interest earned.


NRO accounts do not allow you to freely repatriate or transfer your principal amount but only your FD interest.

NRE accounts let you transfer your entire corpus to a foreign account, provided the account is owned by you. 


Only INR is applicable

Both INR and foreign currencies are applicable

Joint Holding

An NRI will be able to open either an NRE or NRO account easily with another NRI or Indian resident in a hassle-free manner.

NRO accounts can only be opened with an Indian resident.

Understanding Types of NRI Accounts

To make an informed decision, it's best to learn the different account types available in the market. 

1. NRE Accounts

These  accounts are ideal for NRIs who wish to store their foreign currency funds in an Indian bank. Upon depositing the sum, it will be converted into Indian Rupees, allowing them to withdraw funds in INR. 

Besides FDs, there are different kinds of NRE accounts available, including current accounts, savings accounts, and recurring deposits. All of these can either be opened either individually or jointly. However, this can only be done with another NRI. 


It is also important to note that NRE accounts can be subject to exchange risk fluctuations, which could bring down the value of the initial deposit. This is because they do not provide any security against currency fluctuations, which are usually volatile and subject to change on a day-to-day basis. 

2. NRO Accounts

Another popular form of depositing funds for many NRIs is through NRO accounts, which allows them to store and manage their pension, dividends, rent, and more conveniently. This allows them to receive funds in either Indian Rupees or a foreign currency, to be held in the country. 


However, money can only be withdrawn in INR and does not feature the provision of being freely transferable into another foreign currency. NRIs will be able to open an account jointly with either an Indian citizen or another NRI. 

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Benefits of NRI Accounts Explained

1. NRE Accounts

Here are some benefits of opening an NRE account: 

  • Both, the principal amount and the interest earned in such accounts are exempt from any taxation

  • Option to  freely transfer funds from an NRE account to a foreign account without any restrictions

  • Funds in these accounts can be utilised for all your personal requirements or to conduct business in India 

  • Facility to invest in Indian investment instruments by linking your NRE account with a trading account

  • Fund withdrawal by using an international debit card  

2. NRO Accounts

Some of the advantages of opening an NRO account are:

  • Interest amount earned in an NRO account can be freely repatriable in INR to another account

  • Funds can be used as collateral to avail loans

  • Permission to remit up to $1 Million during the ongoing financial year after paying the applicable taxes

  • Under joint account, the Indian account holder can manage financial obligations within the country on the NRI’s behalf 

  • Availability of high interest rates on NRI savings accounts 

Choosing Between an NRE and NRO Account

The choice between the two can depend on your financial requirements and whether you earn money in Indian Rupees or foreign cash. Another consideration is if an NRI prefers a repatriable or non-repatriable account. 


It is recommended to keep these restrictions in mind, despite the fact that the interest rate is considerably larger than that of typical savings accounts. An NRE account is not free from taxation, but there is a chance that the exchange rate could vary based on the fluctuating foreign exchange rates.


However, an NRO account is ideal for those looking to retain their savings in Indian currency. You stay up to date with the latest FD rates to make the right financial decisions for yourself. 


To begin investing in different lucrative avenues, visit the Bajaj Markets platform and start your journey to wealth creation today. 


The information provided by BFDL herein above is related to the Non-Partnered Banks/ NBFCs and is just for the purpose of information and under no circumstances the information provided hereinabove is intended to be source of advice or recommending any financial investment advice or endorsement of any sort. 

The information including interest rates with regard to fixed deposit, provided on this website is gathered through publicly available sources over the internet and is considered as accurate and reliable to the best of our knowledge. BFDL disclaims any responsibility or liability regarding inaccuracies, omissions, mistakes etc. as well as offers by the Non-Partnered Banks. The use of information set out is entirely at the User’s own risk and User should exercise due care prior taking of any decision, on the basis of information mentioned hereinabove. You are advised to visit/ contact the respective Banks/ NBFCs to verify the information before making any investment or opening an account. Further, BFDL does not undertake any responsibility or liability to update this information. YOU ARE SOLELY RESPONSIBLE FOR ANY LIABILITY OR DAMAGE YOU INCUR THROUGH ACCESS TO OR USE OF THE SITE OR SUCH INFORMATION OR MATERIALS EXCEPT WHERE THE LAWS AND REGULATIONS OF A PARTICULAR JURISDICTION CONCERNING WARRANTIES CANNOT BE WAIVED. Additionally, display of any trademarks, tradenames, logo and other subject matters of intellectual property owners. Display of such Intellectual Property along with the related product information does not imply BFDL’s partnership with the owner of the Intellectual Property of such products. 

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