Let’s try to understand in this article about the Term loans accounts, OD (Overdraft) accounts, NRI accounts in the Indian banking sector, so stick with me in this article till the end,
As you have the term loan accounts and these are taken by the big industries for a long-term, so that they can actually use to finance their fixed asset and they can acquire lots of machinery they can acquire some equipment using the term loan and these are also taken by large businesses or sometimes medium-sized businesses, csp online application and some CC & Term loans accounts are also classified under the SME advances, so they also fall apart under the SME advances,
And then you have an overdraft account or the OD facility, current account holder sometimes get this and this is a kind of a facility by which when the money is running out in your main account, they give you the OD facility you can just get a short term loan from the bank & you can later pay it off, so this is what you need to know and you don’t have to learn a lot about these things that is why I am not going into detail but this will be fine but ever I have explained,
Now coming to the NRI and the forex account these are very important, the accounts that the NRIs can open so three main accounts is the NRE account the NRO account and the FCNR account and what are these types of accounts, so let’s assume that you are working with a bank let’s say you are working with SBI & they decide to transfer you to New York,
now if you are in New York SBI Branch then which account will be required for you to get the money that you are earning from abroad now that account will be the non-residential external rupee account or the NRE account, so all the income that you are generating from New York you can credit it to your NRE account and that’s the main purpose of that account, now that account remember NRE account it’s going to be denominated in the Indian rupee, so it’s rupee account,
Then coming to the NRO or the non-resident ordinary rupee account, so what happens in that NRO account, you are getting income from India to say so you have a property you might have some dividend you might have many other types of income that are originating in India and that has not originated from New York so what is going to happen to that money can you credit it to your NRE account no you cannot do that you have to open an NRO account non-resident ordinary rupee account so that all the income that has generated from India can be deposited in that account, and this is also Indian currency account, so it is maintained in rupee,
Then coming to the FCNR account or you can say the foreign currency non-resident bank account so this account allows you to maintain your earnings in the foreign currency itself so all the allowable currencies they can help you to maintain it csp kiosk banking,
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Coming to the NRO account,
So it can be maintained as a savings account as a current account as an RD or an FD and in the NRE account as well you can maintain it as savings account current account recurring deposit fixed deposit any kind of account you can open in your NRO and your NRE account, but in FCNR(B) account you can only have term deposits, so only fixed deposits are allowed in your FCNR(B) account this is very important and the tenure is 5 years maximum tenure is 10 years and, so that’s the main difference in the account types,
WHAT IS NRI account ?
NRI (Non-Residential Indian) accounts are special bank accounts offered to Indian citizens who are living abroad for employment, business, or any other purpose. These accounts allow NRIs to manage their finances in India, including savings, fixed deposits, and investments, from abroad. NRI accounts are typically offered in two types: NRE (Non-Residential External) accounts and NRO (Non-Residential Ordinary) accounts.
Who is eligible for NRI account?
An Indian citizen who holds a passport and is residing abroad for employment, business, education, or any other purpose is eligible for an NRI (Non-Residential Indian) account. The individual must be living abroad for more than 182 days in a financial year to be considered an NRI. Additionally, Indian citizens who have acquired foreign citizenship but still have an Indian passport are also eligible for NRI accounts.
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What is the benefit of NRI account?
There are several benefits of having an NRI (Non-Residential Indian) account:
- Financial management: NRI accounts allow Indian citizens living abroad to manage their financial assets in India from abroad, including savings, fixed deposits, and investments.
- Remittances: NRI accounts facilitate easy and convenient transfer of money from abroad to India.
- Interest rates: NRI accounts offer attractive interest rates on deposits, which are higher compared to regular savings accounts.
- Tax benefits: Deposits held in NRE accounts are tax-free in India, while interest earned on NRO accounts is taxed at 30%.
- Estate planning: NRI accounts allow for proper estate planning and management of assets in India, including inheritance and distribution of wealth.
- Convenience: NRI accounts provide a single point of contact for all financial transactions, making it easier to manage finances in India.
What is difference between NRI and NRE account?
NRE (Non-Residential External) and NRO (Non-Residential Ordinary) accounts are two types of NRI Accounts offered by banks in India. The main differences between these two types of accounts are:
- Currency: NRE accounts are denominated in Indian Rupees, while NRO accounts are denominated in foreign currency.
- Repatriation: NRE accounts allow for easy repatriation of funds to the individual’s home country, while repatriation from NRO accounts is subject to certain restrictions and regulations.
- Taxation: Interest earned on NRE accounts is tax-free in India, while interest earned on NRO accounts is taxed at 30%.
- Purpose: NRE accounts are typically used for savings, fixed deposits, and other financial investments, while NRO accounts are used for managing income earned in India, such as rental income, pensions, etc.
What is the minimum balance for NRI account?
The minimum balance required for an NRI (Non-Residential Indian) account may vary depending on the bank and the type of account. For NRE (Non-Residential External) accounts, some banks may require a minimum balance of INR 10,000 to INR 25,000, while others may have no minimum balance requirement. For NRO (Non-Residential Ordinary) accounts, the minimum balance requirement may range from INR 10,000 to INR 50,000, again depending on the bank
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Which Indian bank is best for NRI?
The best Indian bank for NRI (Non-Residential Indian) account may vary based on individual requirements and preferences. Some of the most popular banks for NRI accounts include:
- State Bank of India (SBI)
- HDFC Bank
- ICICI Bank
- Axis Bank
- Kotak Mahindra Bank
These banks offer a range of NRI services, including NRE (Non-Residential External) and NRO (Non-Residential Ordinary) accounts, remittances, investments, and other financial products. It is recommended to compare the features and services offered by different banks and choose one that best meets your specific financial requirements and objectives.
What are the rules for NRI?
NRIs (Non-Residential Indians) are subject to certain rules and regulations in India, which include:
- Taxation: NRIs are subject to Indian tax laws on their income earned in India and overseas. They are also required to file tax returns in India if their income in India exceeds the prescribed threshold.
- Foreign Exchange Management Act (FEMA): NRIs are required to comply with the regulations of the FEMA, which governs foreign exchange transactions in India.
- Property ownership: NRIs are allowed to own and sell property in India, but there are certain restrictions on agricultural land and plantation property ownership.
- Repatriation: NRIs are allowed to repatriate their funds held in NRE (Non-Residential External) accounts, subject to certain conditions and restrictions.
- Investment: NRIs are allowed to make investments in India, including bonds, shares, and other financial instruments, subject to FEMA regulations.
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Do I need Aadhar card if I am NRI?
NRIs (Non-Residential Indians) are not required to have an Aadhaar card. Aadhaar is a 12-digit unique identity number issued by the Indian government to residents of India, and it is not mandatory for NRIs to enroll for Aadhaar. However, if an NRI has an Aadhaar card and wishes to use it for financial transactions in India, they may do so, as long as their details in the Aadhaar database are up to date and accurate.
Do NRIs need PAN number?
Yes, NRIs (Non-Residential Indians) are required to have a PAN (Permanent Account Number) in India if they have any taxable income in India. PAN is a 10-digit alphanumeric identifier issued by the Indian government’s Income Tax Department, and it is mandatory for all taxpayers, including NRIs, to quote their PAN in all financial transactions, including those related to bank accounts, investments, and property transactions.
In case an NRI does not have a PAN, they can apply for one through authorized PAN agents in India, or by submitting an application to the Indian Income Tax Department. It is important for NRIs to ensure that their PAN details are up-to-date and accurate, to avoid any complications with their financial transactions in India.
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Which income is not taxable for NRI?
NRIs (Non-Residential Indians) are taxed in India on their income earned in India and abroad. However, there are certain types of income that are not taxable for NRIs in India:
- Interest income earned on NRE (Non-Residential External) account deposits is tax-free in India.
- Income earned outside India, including salaries, pensions, and capital gains, is not taxable in India if it is not repatriated to India.
- Rent received from a property owned by the NRI in India is not taxable in India if the NRI is residing outside India for more than 182 days in a financial year.
- Agricultural income is not taxable in India, but there are certain restrictions on the ownership of agricultural land and plantation property for NRIs.
So as I have explained everything about Term loans accounts, OD (Overdraft) accounts, NRI accounts in the Indian banking sector, I hope this article was informative for you, thank you.