Frequently Asked Questions on NRI Banking

NRI banking has become an essential financial service for Indians living abroad. With increasing global mobility, NRIs require specialised banking solutions to manage earnings, investments, and remittances across borders. From opening dedicated NRI accounts to understanding taxation and fund transfer options, NRI banking ensures convenience and financial security. However, with various rules and restrictions under FEMA, it is important for NRIs to stay informed. This article answers common questions to help you simplify NRI banking in India.

NRI banking: 6 frequently asked questions
 

 1. Who can open an NRI bank account?
 

An NRI bank account can be opened by

• An Indian citizen living outside of India for an uncertain period (being employed, pursuing education or carrying out any business/vocation)
• An Indian national or of Indian Origin (Person of Indian Original/Overseas Citizen of India)
• A Seafarer working on international vessels
• An Oil rig employee working on International Offshore Projects

If you wish to open an NRI savings account but need help with where to start, IDFC FIRST Bank can be your go-to banking partner - Thanks to the Bank’s diverse product range and customer-centric services. 

2. What are the documents required to open an NRI bank account?
 

To open an NRI Savings Account, you are required to submit documents under four major categories:

• Proof of identity such as a passport
• Address proof
• NRI/ PIO / OCI proof/ CDC booklet in case of seafarer
• PAN (mandatory for non-face-to-face applications)/ Form 60

Documentation requirements may vary across banks based on the applicant's country of residence and the account type.

3. Which entities are accepted as attesting authorities while opening an NRI Savings Account?

While opening an NRI Savings Account (through non face-to-face mode) from overseas country of residence, attestations on the KYC documents are accepted from any of the below entities as per RBI regulations:

• Authorised officials of overseas branches of Scheduled Commercial Banks registered in India
• Branches of overseas banks with whom Indian banks have relationships
• Notary Public abroad
• Court Magistrate
• Judge
• Indian Embassy/ Consulate General in the country where the non-resident customer resides.

4. Is the interest earned on NRI Savings Accounts taxable in India?
 

For Non-Resident External (NRE) Savings Accounts, the interest earned is tax-free in India under current Income Tax laws. However, the interest on Non-Resident Ordinary (NRO) Savings Accounts is taxable as per Indian tax regulations and is subject to Tax Deducted at Source (TDS).

5. Can I repatriate funds from my NRI Savings Account?
 

Yes, funds in the Non-Resident External (NRE) Savings Account are fully and freely repatriable, meaning you can transfer funds abroad anytime without restrictions. This includes both the principal, and the interest earned.

NRIs are permitted to repatriate up to $1 million per financial year from their Non-Resident Ordinary (NRO) account. This limit allows the repatriation of both the principal after payment of taxes. The interest component is fully repatriable.

6. What are the FEMA guidelines of cash gifts done by NRIs to individuals in India?
 

FEMA has also outlined specific rules when NRIs give cash gifts to individuals in India. Some of these rules are as follows - 

• The NRI or Overseas Citizen of India (OCI) can give a cash gift only through their Non-Resident Ordinary (NRO) or Non-Resident External (NRE) account
• The gift should be in the form of an inward remittance
• If the NRO or NRE account has a Power of Attorney (PoA), the person holding the PoA cannot give a cash gift to a resident. Only the account holder is eligible to give gifts
• The resident receiving the cash gift cannot hold more than $2,000 or an equivalent sum at any particular time

To sum it up
 

NRI banking offers a structured way to manage finances in India while living abroad. From seamless remittances to diverse investment avenues, these services ensure financial flexibility and security. However, understanding eligibility, documentation, tax implications, and restrictions is crucial to avoid complications. With customer-friendly services and digital solutions, IDFC FIRST Bank make the entire process smoother for NRIs. By choosing the right banking partner, you can ensure your money works efficiently for your family and long-term goals in India.