You are here

7 Reasons To Switch To An NRI Account

How you handle and transact your money changes when you move to another country. Your earnings and savings are stored in foreign currency. This makes managing your banking and investment formalities in India becomes slightly challenging. To effectively cater to such concerns, it is wise to open a Non-Indian Resident or NRI Account. Many banks offer this facility to global Indians.

It provides services concerning remittances, taxation, currency exchanges, etc., to the holder. Here are reasons why switching to this account is beneficial:

  1. Facilitates Inward Remittances

An NRI Account aids Inward Remittances. It allows the holder to repatriate their income to their dependents in India. For example, you have moved to the USA for work purposes. However, your mother, a dependent individual, resides in Mumbai. You can remit the required amount to your NRI Savings Account to fund your parents’ day-to-day expenses.

  1. Supports investment management

Through your NRI Account, you may invest in Indian investment avenues like Mutual Funds, Debt instruments, Equity, stocks, etc. The Portfolio Investment Scheme facilitates such investments. It is enabled by the Reserve Bank of India to help you manage your trading and investment activities in India.

  1. Saves from exchange rate fluctuations

When you deposit your income earned in a foreign country in a Foreign Currency Non-Resident Account, you need not convert it into INR. The FCNR Account lets you mitigate the risk of foreign currency rate fluctuations. This way, you dodge a reduction in deposit value effectively.

  1. Provides Loan facility

The authorised bank or financial institution may grant Loans to the NRI Account holders in India against the security deposited in the NRI Account. This also applies to any third party associated with the holder. Here, the term ‘Loan’ includes all fund-based/non-fund-based amenities.
However, checking this facility before you open NRI Account online is best. It discards any confusion and saves you from inconvenient future scenarios.

  1. Offers tax benefits

Interest income earned on Non-Resident External and FCNR Accounts does not hold any tax liability. This rule is exercised under the Income Tax Act 1961.

  1. Potential to attract returns

The holder can earn interest income at attractive rates by opting for specific NRI Accounts. These include NRE Deposit and FCNR Deposit. Since interest rates in India have stayed higher than in many western countries, the holder can enjoy promising returns.

  1. Minimal balance requirements

You need not maintain high balances in your NRE or Non-Resident Ordinary Accounts. In recent times, most banks have dropped their minimum balance requirement considerably. As a holder, you only need to maintain INR 10,000 or so as a minimum balance.
For further clarity, contact your banking partner. Having sufficient knowledge about such requirements benefits you in the long run. It enables you to avoid unnecessary penalty charges.