Benefits of NRE Bank Account and Fixed Deposits
An NRE account can be opened as a savings account or a fixed deposit account. Read on to know more about its benefits.
As a Non-resident Indian or an NRI, you may feel the need to maintain a bank account in India to deposit your overseas earnings and keep them in Indian currency. For this purpose, an NRE (Non-resident External) account would be an ideal choice of NRI account.
An NRE account allows you to park your earnings in a foreign country in an Indian bank. You can deposit the earnings in a foreign currency in this account, but the amount will be converted into INR as per the prevailing exchange rate at the time of deposit. This means you can deposit the money in any foreign currency and withdraw the same in Indian Rupees.
Today, most banks in India that offer NRE account give you the flexibility to either open an NRE savings account or NRE fixed deposit account to suit your specific needs. You can even consider opening a joint account with another NRI.
Now that you are aware of what NRE Account is, it would help you know its benefits, which are discussed below:
Low Minimum Balance
All Indian banks require the account holders to maintain a minimum balance in their account. This applies to both resident Indian and NRI account holders. The minimum balance required varies from bank to bank, but it generally ranges from Rs. 500 to Rs. 10,000 or more.
But, today, with the increasing competition among the banks, the minimum balance required for account maintenance has dropped significantly. Most popular banks have a minimum balance requirement of Rs. 10,000.
Higher Interest Rate
An NRE account not only allows you to park your funds safely, but it also helps earn returns from you through interest payments. Both NRE savings account and fixed deposit offer a high-interest rate, which may vary from bank to bank, but it typically ranges from 4-6%. The NRE deposit interest is calculated on the daily closing balance, and it is paid half-yearly (usually in June and December).
Another significant benefit of an NRE account is that it allows you to easily move or transfer the funds in your account (both the principal and the interest amount) abroad or to your NRO account without any restrictions. Also, there are no charges involved in the repatriation of the funds.
Joint Account Holding
No matter if you wish to open an NRE savings account or a fixed deposit account, you can open it jointly with another NRI. The account’s joint owner can be anyone, be it your spouse, children, or parents. A joint account allows you to manage your funds with your family member better and keep a tab on the transactions.
Even if you live abroad, you may want to invest in the Indian money market, and the NRE account gives you the perfect getaway to make your investments. You can link your NRE savings account to the investment account and make online payments towards the investments of your choice. You can also give the bank a standing instruction to auto-debit a specific amount from the NRE deposit on a particular day of the month towards investments.
Most banks in India offer an international debit card to all NRE account holders, which allows them to use it for various international transactions, be it for shopping in a foreign country, book airline tickets, or withdrawing cash abroad. However, when you open the account, you must ask the banker about the charges involved for international transactions, especially cash withdrawal, and use it wisely.
Thus, there is more than one benefit of having an NRE savings account or fixed deposit account. It gives you the liberty to save your foreign income in India, get returns, and enjoy tax benefits. Ensure that you choose the right bank known to offer the best services both in India and in the country of residence.