As NRIs are not allowed to open or maintain regular bank accounts in India, they can deposit their Indian income in an NRO account. Read this post to know more about NRO accounts and their benefits.
Even after moving to a foreign country, a lot of NRIs have income sources in India. But according to the current laws, once an Indian attains an NRI status, he/she is no longer allowed to open or maintain any regular bank account.
NRIs with income sources, like rent, dividends, etc. in India can consider opening an NRO account for depositing their earnings. Take a look at what this account is and what are its top benefits-
What is an NRO Account?
An NRO or Non-Resident Ordinary account is for NRIs to deposit their income that originates in India. It can either be a savings, current, or term deposit account. NRO savings and term deposit accounts generate interest just like regular bank accounts, making them an excellent solution for NRIs to earn additional income on their parked funds.
Benefits of Opening an NRO Account
Here are some of the top advantages of opening an NRO account in India-
- Easy Management of Indian Income
The top reason for NRIs to open NRO account is to manage their Indian income easily. Using an NRO account is like using a regular bank account with complete flexibility regarding online banking, deposits, withdrawals, fund transfers, and bill payments.
With the help of an NRO account, NRIs can access banking services in India in the most hassle-free and efficient manner.
- Instant Repatriation
NRIs can also repatriate or transfer the amount parked in their NRO account to their current country of residence. The interest amount can be fully repatriated after applicable tax deduction, and the principal amount of up to USD 1 million can be repatriated in a financial year.
Moreover, if you live in a country with which India has a DTAA (Double Tax Avoidance Agreement), you can use it to reduce your tax liabilities.
- Joint Account Holding with Additional Mandate Holder
NRIs are also allowed to open an NRO account along with another NRI or a resident Indian as the joint holder. Apart from the joint holder, an NRI can also have a mandate holder who will have limited access to the account in India.
You can select anyone from your family in India as the mandate holder to make it easier for them to use your account on your behalf. The mandate holder is also provided a debit card and cheque book.
- Loan Against NRO FD
If you have an NRO FD, most of the banks also offer loans against the deposit amount. The loans can be as high as 80% of the FD deposit. As compared to unsecured loans, the interest rate on loans against FD is comparatively lower.
Rather than breaking your NRO FD in case of a financial need, you can take a loan against it at competitive interest rates.
Opening an NRO Bank Account
Some of the top banks in India now allow you to open an NRO bank account online. You can fill and upload the account opening form along with documents like identity proof, foreign residency proof, etc. to apply for the account online.
Alternatively, if the bank has a foreign branch close to your location, you can also visit the branch to apply for the account.