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The write up contains information related to Non Resident External Rupee account that is available for NRI. Basics, Features and advantages of NRE account are briefed in this write up.

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Non Resident External (NRE) Rupee Account

Non Resident External account:-
Non Resident External account can be defined as an account that allows transfer or conversion of Indian currency across borders in an effective manner and is also equipped with options to avail various types of saving schemes in India.
Features of NRE account:-
There are few features of this account that play a major role in distinguishing this account from its counterparts.
  • The fact that the account runs on Indian rupees can be known by the name itself.
  • Amounts in this account can be repatriated across borders of India.
  • This is an account that can be opened only by a Non Resident Indian and the joint holders can be either NRIs or PIOs (Person of Indian Origin).
  • Amounts can be deposited into this account;
    1. In Indian rupee as well as certain permissible foreign currencies, to be deposited personally by an NRI when he visits India
    2. Through foreign exchange transfer from abroad
    3. Transfer through NRE or FCNR accounts held with other financial institutions
  • Loans in foreign countries can be availed by an NRI through these accounts.
  • The RBI standardizes transaction procedures that are to be documented and the report must be submitted to RBI. Transactions that cross Rs. 1,00,000 limit as well as certain specified items require documentation. Form A4 needs to be filled by NRI in cases where the amount is in foreign currency either through remittance or through modes of cheques, demand drafts etc.
  • No tax is levied on interest that is gained from deposits in this account.
  • The Power of attorney is limited to perform few basic functions like withdrawing money and remitting money across the border to reach the account holder himself.
  • FEMA regulates credit and debit flow within this account by having a set of permissible transfer types into or out from this account.

    1. Deposits of foreign currency in the form of cheques, amount remitted through banking channels, foreign exchange by the account holder himself when he comes to India and transfer from other FCNR and NRE accounts. Apart from above permissible credits, money earned through government bonds, mutual funds etc can also be deposited in this a/c. All credits are subject to RBI regulations and a person has to look into the set of transfers that have ‘general permission’ before opening an NRE account.

    2. Debits from NRE accounts are subject to ‘general permission’ to invest in shares, mutual funds, to transfer to other NRE/FCNR accounts, to remit outward etc. 
  • A person is allowed to overdraw money from this account for a period not more than 14 days and the amount that can be overdrawn is limited to Rs 50,000. The account holder is bound to pay back this overdrawn money along with the prescribed interest within a period of 14 days. 
Advantages of Non Resident External (Rupee) account:-
NRE account has its advantages but it is very much important to know the regulations of FEMA first. Some advantages of NRE accounts are:
  • Non Resident Indians can invest in saving schemes and deposit schemes of Indian banks through this account.
  • Loans can be availed from both foreign and Indian banks and the permissible limit for purpose is quite broad as compared to loans provided to other accounts.
  • The balances in these accounts can be transferred to other NRE/FCNR accounts of the same holder or even to NRE/FCNR accounts of other NRIs.
  • Transfer of funds across borders with no cost of transfer
  • Facilities like payment of bills, cheque books, international credit cards etc are available in these accounts.
The major disadvantage is that the account is maintained in Indian currency and while there are ways to remit or transact in foreign currency; there is a loss to depositors due to the fluctuations in the exchange rates of foreign currency.
NRE Account Providers:-
  • HDFC
  • HSBC
  • SBI
  • Axis bank

  • Mohd Naheem:
    Thanks for the information it helped me a lot.

    Today I shall go to the nearest money exchange and open an account.
    03-Jun-2015 09:03 PM
  • Raghavan:
    Hi Arun,

    I had recently applied for withdrawal of epf funds and as per epf website the funds has been transferred thru NEFT. However the amount has not yet been credited. I had given my NRE account to epf to deposit the fund. Please advise if epf can transfer funds thru neft to NRE account ??

    10-Dec-2014 01:17 AM
  • Arun:
    What are the transfer charges for the amount deposited from abroad to the NRE a/c? And from abroad to the national a/c?
    12-Jul-2013 10:17 PM
  • P.Padmanabhan:
    Dear Ms.Aruna,
    My Son is an NRI residing at Tempe, Arizona, USA, He holds an NRE account in India with SBH, Delhi. His mother holds the power of attorney. Recently he tried trasferring USD to the above NRE account from his Bank of America Savings account. The transanction went through smoothly initially. However, was later refunded by the web transanction site. Thus the transanction was not effected. Could you pl. eleborate and explain how he can transfer USD to the above said his own NRE A/c.
    30-May-2013 12:06 AM
    14-Jan-2013 06:20 PM
  • Mohd Vaziruddin:
    Dear sir/madam,

    I am an NRE and I want to open an NRE account in India. I have an account in Andra bank in Hyderabad India. Please guide me, where in which bank shall I open my NRE account. May I open in the existed AB or any other bank please....
    23-Dec-2012 03:09 PM