To ensure smooth transactions across countries as a non-resident Indian (NRI), there are a few things that you should know.
Firstly, the types of savings account you can operate as an NRI, and secondly, what NRI services you need to choose. With these two parameters in mind, we will help you do both – save money and allow it to grow. Savings accounts for NRIs offer distinct banking and investment services.
With an NRI account, you can save and manage your Indian and foreign income in India while working overseas. Such accounts fall into two categories.
Non-Resident Ordinary (NRO) savings account – This account helps you better manage your funds in India while living abroad. This account may be ideal if you earn some form of income in India, such as mutual fund dividends, rent, pension, etc.
NRO accounts hold India-linked earnings, and interest earnings are subject to TDS. You can also repatriate interest earned on your NRO account to your foreign account. However, transferring funds from an NRO account outside of India is subject to certain limitations.
Non-Resident External (NRE) savings account – This account allows you to deposit your foreign earnings in India. The interest generated in your NRE bank account is tax- exempt as this account holds the income not arising or accruing in India. The funds you maintain in the NRE account and bank deposits are repatriable without any restrictions. Additionally, you can repatriate your investments in a demat account for NRIs.
NRI investment options available in India
Read on to understand the distinct NRI investment options available in the Indian market.
Fixed deposits are not just popular among resident Indians but among NRIs too. FDs are perceived as the safest mode of investment that one can opt for. As an NRI, you can open an FD through your NRE or NRO account. The interest rate can vary by financial institution, deposited amount, and investment tenure.
The real estate market has seen a dramatic increase in prices over the past few decades in many Indian cities like Bengaluru, Mumbai, Delhi, and Pune, among others. This has made real estate an attractive investment option for NRIs, especially those who trace their roots back to these fast growing cities. It is very common for NRIs to buy lands, flats, bungalows, etc., in India and then rent them out to earn significant rental incomes. However, make sure you pick the right project to invest and go with a trusted builder with proven history of delivering projects on time.
Mutual funds for NRIs can also be a good option if this aligns with your investment goals and risk appetite. Mutual funds have the potential to provide higher tax-efficient income than fixed deposits. Note that you can make mutual fund investments only with your NRE or NRO account. However, you must invest in INR (Indian rupees) and not in any other foreign currency. To manage your money smoothly in India while living abroad, you need a bank that works like your partner. Having an NRI account has several advantages, but to make the most of them, you should open an account with the right bank.
Look for a bank that offers robust customer support, a dedicated relationship manager, a wide range of banking services and facilities, higher-than-average rate of interest on investments and other exclusive benefits. For example, IDFC FIRST Bank offers convenient NRI banking services in the industry, based on your needs and preferences.
With a dedicated relationship manager, IDFC FIRST Bank lets you transact in India seamlessly and without hassles. You can choose from NRE, NRO, and Seafarer savings accounts and conduct financial transactions from anywhere, easily.