Banking · Banking for NRIs

NRI Banking — NRE / NRO / FCNR

Three account types — NRE (₹, repatriable, tax-free interest), NRO (₹, India-side income, taxable), FCNR (foreign currency, hedged against rupee fall). Get the wrong combo and you'll either pay tax you don't owe or lose 4-7% on rupee depreciation. ~32M NRIs send back ~$120B/year — the highest remittance flow in the world. RBI tightly regulates these via FEMA.

Who needs this

Indian citizens or PIOs/OCIs working/living abroad ≥ 182 days/year (NRI status under Income Tax Act). Different from RBI's FEMA NRI definition — both apply concurrently. NRIs MUST convert resident accounts to NRO once status changes (mandatory).

Key decisions

Q1
NRE or NRO — which to use for what?
NRE: park your overseas earnings (salary, business income). Fully repatriable + interest is TAX-FREE in India. NRO: park India-side income (rent, dividends, pension). Repatriation capped at $1M/year + interest is fully taxable. Open both — they serve different money flows.
Q2
FCNR — when does it make sense?
FCNR is a fixed deposit denominated in USD/EUR/GBP/AUD/CAD/JPY (no rupee exposure). Choose FCNR when you EXPECT rupee to depreciate — locks in 4.5-5.5% USD-denominated interest. Avoid if you'll spend in INR (you'll lose to FX conversion at maturity).
Q3
TDS on interest — what's the rate?
NRE: 0% TDS (interest exempt). NRO: 30% + cess on interest (highest TDS rate in Indian banking). DTAA (double taxation avoidance) can lower NRO TDS to 10-15% — submit Tax Residency Certificate to your bank to avail.
Q4
Best banks for NRI?
HDFC, ICICI, Axis: strongest NRI portals + relationship managers + competitive FCNR rates. SBI: largest NRI customer base + Public-sector trust. Federal Bank / South Indian Bank: best for Kerala/Gulf corridor remittances.

Top picks

Source: bank disclosures + RBI rate notifications · refreshed monthly

HDFC Bank NRI
Strong portal, FCNR competitive, premium relationship banking from $50K balance.
3.50%
p.a.
ICICI Bank NRI
Best money-transfer platform (Money2India), wide global presence.
3.50%
p.a.
Axis Bank NRI
Privée NRI relationship banking, competitive forex rates.
3.50%
p.a.
SBI NRI
Largest NRI portfolio, lowest FCNR minimum ($1K), public-sector trust.
3.50%
p.a.
Federal Bank NRI
Highest NRE savings interest among large banks. Strong Kerala-Gulf corridor.
4.00%
p.a.

RBI rules + scheme specifics

FEMA-defined NRI: Indian citizen residing outside India (other than for purposes other than employment / business).
Income-Tax-Act NRI: physical presence < 182 days in India in the FY (with extra-rule for income > ₹15L).
NRE interest is tax-FREE under Sec 10(4)(ii) — same applies to FCNR.
NRO repatriation cap: USD 1 million per FY (after taxes paid + with CA's Form 15CA/CB).
FCNR tenures: 1-5 years; minimum deposit $1,000 (or equivalent).
DICGC ₹5L applies to NRE + NRO + FCNR (in INR equivalent for FCNR).