As the name says, most of us know the fact that any Indian living outside is generally known as NRI. When it is expanded, NRI is a Non-Residential Indian. So, it is clear that any Indian residing outside the country holding a Bank account in India is known as an NRI Account. Everyone calls it as NRI Account but is that Account exits. We will check that here.
There are two types of account which an NRI can hold, which is the NRE Account and NRO Account. So, from time to time for simplicity, we call these two types of accounts 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 versions, that is NRE and NRO, and there is no particular 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, i.e., you cannot deposit money to this account in Indian Currency. A large number of people working outside India are keeping NRE Account, and they deposit money to this account from the country where they are living.
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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 Rupees, 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 an 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 people don’t know this fact, and they are keeping the old SB Account with them.
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A few NRIs are holding the NRO Account. As we mentioned above, it is the same as the SB account. You can deposit money in it from India or outside in Indian Rupee. It has the same feature and applicable fees as like regular SB Account. NRO Accounts are not exempted from tax.
NRO Account is needed in some cases. For example, if an NRI is looking to take a loan from their bank. Whether it is a personal loan or housing loan, the bank needs to deposit money to his account. Here, the bank cannot deposit the loan amount to the NRE account, since its cash is in Indian rupee. Here the bank will ask the person to open an NRO account or to convert the existing SB Account to NRO if he has one in the same bank.