NRIs in the UK and other parts of the world who have income sources in India can better manage their earnings with an NRO bank account. But there are a few important things an NRI should check before selecting a bank for their account. Five such things are discussed in this post.
The FEMA (Foreign Exchange Management Act) does not allow NRIs to have a resident savings bank account in India. So, what can NRIs in the UK and other parts of the world with income sources in India do to manage their Indian earnings? An NRO (Non-Residential Ordinary) account can be an effective solution.
An NRO bank account allows you to deposit INR as well as foreign currencies and withdraw the same in INR. The account also earns interest which can be fully repatriated after paying applicable taxes. But while an NRO bank account makes banking easier for NRIs, there are a few things one should know before selecting a bank and applying for the account.
Five of the most important ones are as follows-
1 Types of Account
NRO bank accounts are of many different types such as NRO savings account, NRO FD (Fixed Deposit) account, and NRO RD (Recurring Deposit) account. The NRO savings account is savings account for NRIs to help them better manage their earnings from India.
The NRO FD and RD are deposit accounts that allow you to earn fixed interest over a fixed duration. So, the bank you select for your NRO bank account should offer multiple account options so that you can easily select one that best suits your requirement.
2 Interest Rate
One of the most important considerations before opening an NRO bank account is the interest rate offered by the bank. No matter if you want to open NRO savings account or FD/RD account, select a bank that provides highly competitive interest rates. As compared to NRO FD/RD accounts, the NRO savings account generally offers a lower rate of interest but you can access your funds anytime you like.
Even within the savings account, the interest rate can vary depending on the balance maintained in the account. In the case of the NRO FD/RD account, the interest rate varies based on the amount deposited and the tenure selected.
3 Balance Requirement/Minimum Deposit
If you are planning to open an NRO savings account, you will be required to maintain a certain balance in the account at all times. If the balance in the account falls below the minimum limit, you can be penalised for the same. Similarly, NRO FD/RD accounts have minimum deposit amounts.
Select a bank that has low minimum balance/deposit requirements. You can now find banks that require a MAB (Monthly Average Balance) of just Rs. 2,000 for the NRO savings account. NRO FD accounts can be opened with as little as Rs. 25,000 and NRO RD accounts can be opened with a monthly instalment of Rs. 5,000.
4 Mandate Availability
The bank should also allow you to have a mandate for your NRO bank account. With this facility, you will be allowed to select a resident Indian to manage your account. The mandate holder will then be able to access your account whenever required.
Some of the Indian banks now also provide ATM card and cheque book to the mandate holder for enhanced convenience. So, you can select someone from your family as the mandate holder of your NRO bank account, and they can then use the account when needed.
5 Account Opening Process
The account opening process should be quick and hassle-free with minimum documentation. The bank should have multiple international branches in the country of your current residence so that you can easily visit one close to your location to open an NRO account.
You will mostly be required to visit the bank only once to apply for the account. It will involve filling an account opening form and submitting documents such as passport, address proofs, and visa, along with recent photographs and initial deposit cheque.
Bank Smarter with NRO Accounts for NRIs
Opening an NRO bank account is one of the easiest ways for NRIs in the UK to manage their earnings from India. It not only allows you to deposit and manage your earnings but also earns decent interest on the deposit amount. With multiple account types and a plethora of banking services, you are sure to experience banking in a whole new way.
Look out for the points discussed in this post before opening the account so that you select a reputable bank that makes banking simple, secure, and rewarding.