As the name says, most of us knows the fact that, any Indian living outside is generally known as NRI. When it is expanded, NRI is Non Residential Indian. So, it is clear that, any Indian living outside the country holding a Bank account in India is know as an NRI Account. Basically everyone call it as NRI Account, but actually is that Account exits. We will check that here.
Actually there are two types of account which any NRI can hold, which is NRE Account and NRO Account. So, from time to time for simplicity we call these two type of account as NRI Account. So it is noting any Bank Account whether it is NRE or NRO, it is known as NRI account Itself. So we can make it clear that, we have only two account, that is NRE and NRO and there is no special category called NRI Account.
In other words, we can say that an NRI Account can be either an NRE Account or an NRO Account. Now, we will check what these NRE and NRO Account is, and what the difference in it.
NRE Account (Non Resident External Account)
NRE Account is the most commonly used accounts by NRI. In this account you can only deposit money from outside India, ie. you cannot deposit money to this account in Indian Currency. A large number of people working outside India is keeping NRE Account and they deposit money to this account from the country where they are living.
NRE Account can be opened in any Bank or Branch in India, if you are an NRI, but you can deposit money only from outside. Once the money is credited to your account, it will be in Indian Rupee and you can use it as like any other normal bank account. But also note, in the case of NRE account each bank offer, different offers and benefits. NRE Account is exempted from tax.
NRO Account (Non Residential Ordinary)
NRO account is nothing more than a Normal Savings Bank Account (SB Account) that residents in india using. As per the rule, it is not allowed to hold a SB Account by an NRI. SB Account can only for the residents and any NRI who hold the SB Account have to be converted to NRO. But, even though this is the case, most of the people doesn’t know this fact and they are keeping the old SB Account with them.
A few NRI are holding the NRO Account. As like we mentioned above, it is same like SB account. You can deposit money in it from India or outside in Indian Rupee. It have the same feature and applicable fees as like normal SB Account. NRO Account are not exempted from tax.
NRO Account are needed in some case like a financial need, if an NRI needs to take loan from their bank, and if in the personal loan case, bank needs to deposit money to his account. Here, the bank cannot deposit the loan amount to NRE account, since it money is in Indian rupee. Here the bank will ask the person to open a NRO account or to convert the existing SB Account to NRO if he have one in the same bank.