NRI (non-resident indian)

NRE Accounts in India

Non Resident External Account—Pros and Cons


NRE Accounts and Rules

nre account in india Persons of Indian nationality or origin residing outside of India may open, with authorised banks in India, Non-resident External Accounts (NRE Accounts), designated in rupees. These accounts can be in savings, current, or term deposit accounts. Opening of NRE Accounts jointly by two or more non-residents is permitted as long as all account holders are persons of Indian nationality or origin. To open such accounts, funds must be sent to India in one of the following ways:


(a) Proceeds of foreign exchange remittances from abroad through banking channels in an approved manner.

(b) Proceeds of foreign currency notes and traveller cheques brought into India by the non-resident while on a temporary visit to India.

(c) Transfer from an existing Foreign Currency Non Resident (FCNR) account of the same person.


The account holder must state on the account opening form that he will promptly send notice to his bank if and when he returns to India for permanent residence. Funds from an NRO (Non Resident Ordinary Rupee) account cannot be transferred into an NRE account as NRO funds are non-repatriable and NRE funds are repatriable.


Funds arranged by the account holder through banking channels from any country can be credited to this account. Income from the account holder’s investments funded originally from funds in the NRE account can be credited into it, except in cases where the investments were non-repatriable. In the event of non-repatriable investments, the funds must go into an NRO account.


Remittances from NRE accounts to the country of residence of the account holder or any other country are freely allowed.


What it means for you

You can send funds to India for investment, for example $10,000, through this account. After investing the money, all proceeds or profits can come back to the account and be sent to you in your country of residence as long as the investment was “repatriable”. A repatriable investment means you are allowed to take the profits and original investment back to your country of residence.


Power of attorney

NRE account Persons residing in India may take a Power of Attorney on behalf of a non-resident account holder, provided the powers are restricted to withdrawals for local payments. The resident power of attorney holder cannot repatriate funds held in accounts outside India under any circumstances or make payment of gifts on behalf of the account holder.


Account can also be opened by an eligible non-resident Indian during his temporary visit to India, against tender of foreign currency traveller cheques/currency notes, provided the bank is satisfied that the prospective account holder has not ceased to be a non-resident. The amount so tendered would be endorsed on the Currency Declaration Form (CDF) where applicable, before crediting the rupee equivalent to the account.


Operation of NRE Accounts

There are certain restrictions on the transactions of NRE accounts and some forms such as Form A2 and A4 may need to be filed, for example for purchase of real estate, termed immovable property, or other transactions requiring special permission from the Reserve Bank.


Change of Status from Non-resident to Resident

Immediately upon return of the account holder to residency status in India, the NRE account will be designated either as a resident rupees account or converted to a Resident Foreign Currency Account (RFC) at the discretion of the account holder.


However, if the account holder is only on a short visit to India, the account will continue to be treated as NRE account even during his stay in India. In respect of funds held in fixed deposits in NRE Accounts, interest will be payable at the rate originally fixed, provided the deposit is held for the full term, even after conversions into resident account.


Advantages of NRE Account

  1. Term deposits for one year and above made by non-residents carry higher interest rates than those available to residents in India.
  2. The interest on deposits and any other income accruing on the balance in the accounts are free of Indian Income-tax.
  3. The balances in the accounts are free of Wealth-tax.
  4. Gifts to close relatives in India from out of balances in the accounts are free of Gift-tax, when gifted before 1st October, 1998, thereafter there is no gift tax in India.
  5. The entire credit balance (inclusive of interest earned thereon) can be repatriated outside India at any time without reference to the Reserve Bank.
  6. Local disbursement from the accounts can be made freely.
  7. Investments easy to make. Purchases of mutual funds, Central and State Government Securities and National Plan/Savings Certificates can be made freely from the balances in these accounts.
  8. Sale proceeds/maturity proceeds/repurchase price of mutual funds, securities or certificates originally purchased out of the funds in the account can be freely credited to these accounts by banks, without reference to the Reserve Bank.
  9. Account holders are supplied special series of cheques for operations on these accounts.
  10. Account holders can avail of loans/overdrafts from banks against security of fixed deposits in their NRE accounts.


Disadvantages of NRE Accounts: Currency fluctuation risk

NRE accounts are opened in Indian rupees and all foreign exchange remittances received for credit of those accounts are first converted to Indian rupees at the buying rates by the banks. Any withdrawal in foreign currency will be permitted by the bank by converting Indian rupees in the account to foreign currency at the selling rate. This conversion loss is to be borne by the account holder.

Exchange rates are subject to fluctuation on a day to day basis and the Indian rupee could depreciate against foreign currencies. Balances held in Indian rupees in NRE accounts are thus exposed to exchange fluctuation risk.


The author, Ariadne Horstman, is a financial planner at InvestmentYogi.

Published Jun 30 2010

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manoj said:

very good article.keep it up

August 12, 2010 2:39 AM

taayimanetrust(R) said:

Taayi Mane Trust is residential care with full boarding & lodging facility to the old and children with education, medical care nursing care to the old belonging mostly to poor & middle class individuals of all denominations.

Our ambition is not only give homely environment to old age people but also for the children who are striving for love and affection of mother. Here Taayi mane is providing a home for children who are lacking of all the facilities which the children who have all facilities take for granted so that there will no difference as they would be getting equal opportunity in the world as they are treated equally.

Old Age Home

Home is not where you live, but where they understand and cherish you.

Mother is the person who encompasses compassion, care and acceptance. To those weary after travelling the path of life, Taayi Mane provides the mothering care that is much deserved. After dedicating the lives for their children and facing the uphill climb called Life, we at Taayi Mane provide the old the care, respect and above all dignity in this phase of life.

Taayi Mane intends to be the Emotional, Medical & Financial Crutch at to the disadvantaged strata of the society. Money can buy a lot of things but not the smile on the face or the peace of the mind. With the right infrastructure we intend to provide a blissful living.

“When the sun sets on all hopes, eternal hope springs from the mother’s compassionate heart”

Let us walk together, in this walk of Life and spread happiness and joy.

Child Care

“The cost of living has become very important and as prices rise -- which they will -- it will become more important. Housing has to be the most important factor, taxes are crucial as well; healthcare has also become an issue, as well as childcare.”

Literacy plays an important role to develop any country or society. Literacy can lead to health awareness and empower people to participate in the cultural and economic well being of the country. Though literacy has improved considerably after Independence, it still lags behind compared to other countries. One of the main reasons being lack of Monterey resources for the disadvantaged and the orphans. We at Taayi Mane aim to bridge the gap between the children who strive to be educated & the goodwilled people who are willing to make these children’s dreams come true.

To extend any charitable help, to the deserving people as and when found necessary.

To associate with any charitable or voluntary agencies, students, and youth to carry out any                               project, which will be beneficial to the people.

A good number of elderly persons have sufficient income for their living but no relatives to take care of them in their old age and sickness. Another good number of old people have no income, no relatives to support and are living in a miserable state, being old and sick, mostly bedridden they are in good need of food, shelter, medical aid, loving care, emotional support and respect. These two groups of elderly are liable to get, serious psychological depression.

Our theme is always living with them, eat, play and pray with them. The residents are provided with nutritious food, medical aid and other needs. We provide the facilities for relaxation and recreations, attend to their spiritual needs, and at the end, prepare them for a peaceful death. Thus they have a feeling of wanted ness, belongingness, self worth and dignity.

This Congregation is registered with the GOVERNMENT OF INDIA, Ministry of Home Affairs, New Delhi under the Foreign Contributions Regulations Act, which entitles legal receipt of foreign exchanges for development activities.

The bank account No is 17531450000046  and name TAAYIMANETRUST  and address of the bank is HDFC BANK,KANAKAPARA ROAD BRANCH, Bangalore district, Karnataka State, Bank Code:1753

All contributions to Taayi Mane Trust are exempt under section 80G of the IT Act.

Cheques/DDs may please be made in the name of “Taayi Mane Trust, Bangalore” at the address given below.

Direct credit may also be made into the account of Taayi Mane Trust

Help us help the helpless elderly.

Become a member and lend

a helping hand.

1. Patron Member One-time contribution: Rs. 1,00,000/-

2. Life Member One-time contribution: Rs. 10,000/-

3. Ordinary Member Annual contribution: Rs. 500/-

Patron Member & Life Member can choose a day on which a lunch will be hosted for the residents of Taayi Mane once a year. There will be an annual get together for the local members at Bangalore. Local members can also celebrate birthdays, anniversaries, etc. with the elders at Taayi Mane

Taayi Mane is a Home now slowly developing the entire infrastructure. Some important features of Taayi Mane are:

Entrance to the Home

v  The home is being built on 2.5 acre plot with many trees and garden being developed with pavements etc.

v  It is being constructed with 35 rooms initially.

v  Each room is 200 sq ft with attached bathroom and a verandah. It is self contained with hot water provided by Solar Water Heaters.

v  The rooms will be equipped with cots, mattresses, bed sheets, pillow, mosquito nets and cupboard with safety lockers, chairs, tables and stands for drying clothes.

v   A big Community Hall, equipped with library, television, newspapers, Loon for rehabilitation, exercise equipment and sufficient space for community programs is also used to arrange Cancer camps and Eye Check–up camps.

v  The Home will have a Meditation Hall utilized to enjoy peace along with evening prayers, bhajans or simply meditations.

v  In case of emergencies, transport will be provided to the residents who need to go to the hospitals.

v  Medical tests will be arranged in the home with doctors visiting 3 times a week at absolutely moderate charges.

v  Later on it is going to develop a school and college with free       education, hostel facility, clothing and food for the children who are unable fulfill them.

v  Taayi Mane Trust provides:

         o Morning Tea

         o Breakfast      

         o Lunch        

         o Afternoon Tea      

         o Dinner

v  Taayimane Trust also has a party hall & the income from the party hall will be utilized for the benefit of the Trust. The members of Taayimane Trust shall have a benefit of using this party hall for the special occasion at no cost.

With kind regards:





Managing trustee:

Our E-mail:


# 40,

Nijagal Kempohalli,


Bangalore Rural Area,

Bangalore - 562111

September 9, 2010 6:59 AM

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