Every year there is an exodus of Indians to countries abroad, who eventually attain the status of Non-Resident Indians (NRI). However, that does not mean that they have no connection with India. In fact, most people of Indian origin residing outside the country wish to continue investing in their country. However, this is only possible by maintaining bank accounts in India.
While NRIs are allowed to do banking here, there are certain rules and regulations in place. Under the Foreign Exchange Management Act (FEMA), they cannot have accounts similar to those of Indians. However, they can open specific NRI accounts that meet their needs such as the NRE (Non-resident External) recurring deposit account which allows them the freedom to invest money on a regular basis. Although the NRE RD account is highly recommended, there are certain conditions that an NRI must meet in order to open this account. Here’s all you need to know.
What exactly is an NRE recurring deposit account?
With an NRE recurring deposit account, an NRI can invest small amounts in India on a monthly basis. This is useful in the long run because it saves a lot of money. The account is kept in rupees.
The recurring deposit works the same way as a fixed deposit. Each month, a payment of a pre-fixed amount earns the same interest for the duration of his mandate with the bank. At maturity, the client receives a cumulative value of all payments plus interest received.
Who is eligible to open an NRE RD account?
As the account will meet an NRI, the first eligibility criteria is that the applicant must be an NRI (Non-Resident Indian) or a PIO (Person of Indian Origin). Before opening the account with a bank such as ICICI Bank, NRIs should ensure that they have an NRE savings account with the same bank, as it will be used to transfer money. money in RD account. The money consists of the principal and the interest after the maturity of the recurring deposit, which will be transferred to this account.
In addition, this type of account allows NRIs to hold the account jointly with another NRI.
How to open an NRE RD account?
Opening a bank account in India while living abroad may seem like a tedious process, but it’s pretty straightforward. NRIs simply need to follow a few steps to open a NRE RD account. To get started, they need to check if they meet the main eligibility criteria for this account to work.
Once the criteria are met, they can either apply online or download the account opening form on the bank’s website. If NRIs cannot find the form online, they can contact the bank asking them to provide it. Then just follow the instructions and fill out the form, attach the relevant documents mentioned and send the completed form to the bank’s address.
What documentation is required to open this account?
An important aspect of opening an account with any bank is having the right set of documents. Opening an NRE RD account requires almost the same set of documents as an NRE savings account. NRIs wishing to open an account at a bank branch in India or overseas need self-certified photocopies of their passport (the first four and last pages), work permit / work visa / visa of valid residence / residence permit, and proof of address, as per specific bank guidelines. People requesting the account can consult the list of valid proof of address provided on the bank’s website to eliminate any confusion.
NRIs applying for account opening outside India require some additional documents and formalities. These include photocopies of passport (first four and last four pages), valid work permit / work visa / residence visa / residence permit, proof of address, as per bank specific guidelines . It should be noted that the bank requires all photocopies to be certified by the applicant as well as certified by a notary / embassy or consular officials / banker.
The set of documents required to open an NRE RD account differs from NRI to PIO. Although PIOs need all the documents required by NRIs, they must also provide a PIO card or old Indian passport of the applicant / parent / grandparent as well as a self-declaration on their origin or any document specific to the applicant. the related bank.
If all the above mentioned documents provided to the bank are correct and no anomalies are found, an NRI will have their NRE RD account opened without any problems.
What are the advantages of having an NRE RD account?
Besides allowing an NRI to hold a bank account in India, there are several advantages to having an NRE RD account. It allows easy transfer of funds from NRE savings accounts, which is why it is essential to have an NRE savings account at the same bank, where an NRI is looking to open an NRE RD account.
The account offers the option of choosing monthly installments ranging from 5,000 to 1,000,000. ICICI Bank allows NRIs to make small monthly investments of up to 1 lakh in multiples of 1000. It also offers a flexible tenure period of one to 10 years and customers can choose what suits them best. There are no tax deductions and the interest rate is attractive. That’s not all. With ICICI, total repatriation is possible.
NRE RD account facilitates the movement of funds from India to overseas, which is one of the main reasons NRIs want to open bank accounts in India.
Besides the accessibility benefit, an NRE RD account also offers monetary benefits. NRIs are exempt from tax in India on the interest they earn. Another monetary advantage is that it offers favorable exchange rates on converting foreign currency to Indian currency.
NRE RD account facilitates monetary transactions to India. This is exactly why it is preferred by Indians abroad. NRIs can simply choose an Indian bank of their choice such as ICICI Bank and speak to the executives of the bank for clarification on the whole process.