NRO Account

What is NRO (Non-Residential External) Account?

An NRO (Non-Residential Ordinary) account is a special type of bank account designed for Indians living outside of India. It allows them to manage their income earned in India and conduct financial transactions within the country.

Features of NRO Account:

1. Purpose: An NRO account serves as a medium for NRIs to manage their income earned in India, such as rent, dividends, pension, or any other form of Indian income.
2. Currency: The NRO account is maintained in Indian Rupees (INR) only. It cannot hold foreign currencies like US dollars or euros.
3. Types: NRO accounts can be opened as savings, current, fixed deposit, or recurring deposit accounts, depending on the requirements and preferences of the NRI.
4. Joint Accounts: NRO accounts can be held jointly with another NRI or an Indian resident. However, joint account holders need to be aware of the specific regulations governing the account.
5. Transaction Restrictions: NRIs can use funds from their NRO account to make payments in India. However, the use of these funds for certain restricted transactions, such as investments in Indian properties or shares, may require specific approvals from regulatory authorities like the Reserve Bank of India (RBI).
6. Documents Required: To open an NRO account, NRIs are generally required to submit copies of their passport, valid visa, proof of Indian origin, overseas address proof, and a recent photograph. The exact documentation may vary depending on the bank's policies.

Opening an NRO Account:

To open an NRO account, NRIs can approach any authorized bank or financial institution in India. It is advisable to research and compare the services, fees, and features offered by different banks before making a decision. Most banks provide online account opening facilities, making it convenient for NRIs residing abroad to initiate the account opening process.

NRO vs NRE Account

NRE (Non-Residential External) and NRO (Non-Residential Ordinary) accounts are two distinct types of bank accounts available to Non-Residential Indians (NRIs) for managing their finances in India. These accounts cater to different financial needs and have specific characteristics that set them apart.

An NRE account is designed for NRIs to hold and manage their foreign income. It allows NRIs to deposit and maintain their earnings in foreign currency, usually in the currency of the country where they reside. The key benefit of an NRE account is that funds can be freely repatriated back to the NRI's country of residence without any restrictions. This flexibility makes it convenient for NRIs to transfer money from their NRE account abroad, enabling them to manage their foreign income effectively.

In contrast, an NRO account is intended for managing income earned within India by NRIs. It is maintained in Indian Rupees (INR) and specifically caters to income sources like rent, dividends, pensions, or any other Indian income. While an NRO account allows NRIs to handle their Indian earnings, the repatriation of funds from this account is subject to certain restrictions imposed by the Reserve Bank of India (RBI). NRIs can repatriate a maximum amount determined by the RBI, and specific conditions and documentation may be required for repatriation.

When choosing between an NRE and NRO account, NRIs should consider the nature of their income sources and their repatriation needs. If they primarily earn income outside of India and require flexibility in repatriation, an NRE account would be suitable. On the other hand, if their income is generated within India, an NRO account is more appropriate for managing and accessing their Indian earnings.