Yes, NRIs can maintain savings accounts in India, but the account type and rules change based on your residency status
If you're a Non-Resident Indian (NRI)—someone who holds Indian citizenship but lives and works outside India—you can keep a savings account open in India. However, the account must be designated as an NRE (Non-Resident External) account or NRO (Non-Resident Ordinary) account, not a regular resident savings account. The type you need depends on where your money comes from and what you plan to do with it.
Banks don't automatically convert your account when you leave India. You must formally notify your bank of your NRI status, usually within a set timeframe after you move abroad. If you don't, the bank may freeze the account or restrict certain transactions. The process itself is straightforward—most banks handle it through a form and proof of your overseas residency—but the rules that follow are strict about what money can enter and leave the account.
Key Takeaways
- You must inform your bank in writing that you are now an NRI and request conversion to an NRE or NRO account within a reasonable time after moving abroad.
- NRE accounts hold money earned abroad and can be freely transferred out of India, while NRO accounts hold rupees earned in India and have restrictions on moving money out.
- Interest earned on both account types is taxable in India, and you must file an Indian tax return if your total income exceeds the threshold, even while living abroad.
- Some banks require a minimum balance for NRI accounts that is higher than for resident accounts, and fees may explore for account maintenance or international transfers.
- If you return to India and become a resident again, you must convert the account back to a regular savings account or it will continue operating under NRI rules.
NRE accounts: for money you earn abroad
An NRE (Non-Resident External) account is designed for money you earn outside India—salary, freelance income, investment returns, or any funds in foreign currency. You can deposit foreign currency directly, and the bank converts it to Indian rupees at the current exchange rate. The key advantage is that money in an NRE account can be transferred back out of India without restriction, and there is no tax on the money itself when it leaves the country.
Interest earned on the NRE account balance is taxable in India, so you will need to report it on your Indian tax return. The interest rate is usually lower than on NRO accounts—typically 3 to 5 percent annually, depending on the bank and the balance tier. You can withdraw money anytime, and there is no lock-in period. Most banks allow online transfers from an NRE account to a foreign bank account, though some require you to visit a branch in person for the first transfer.
NRO accounts: for money earned in India
An NRO (Non-Resident Ordinary) account holds rupees that you earned in India before you left—rental income from property you own there, pension payments, or money from selling assets. You cannot deposit foreign currency into an NRO account; all deposits must be in Indian rupees. The account exists to manage your Indian-source income while you live abroad.
The restriction is on moving money out. You can withdraw rupees from an NRO account and spend them in India freely, but transferring money to a foreign bank account requires Reserve Bank of India (RBI) permission and is limited to a set amount per financial year—currently up to $1 million USD equivalent, though this can change. Interest on NRO accounts is also taxable in India. Because of the transfer restrictions, NRO accounts are useful if you plan to visit India regularly and need rupees, or if you own property or receive income there.
How to convert your account and what banks need from you
Contact your bank as soon as you move abroad and inform them of your NRI status. You will need to submit a written request (most banks have a form) along with proof that you now live outside India. Acceptable proof includes a copy of your passport showing the visa or residency permit, an employment letter from your overseas employer with your address, a utility bill from your new country, or a bank statement from your foreign bank account showing your name and address.
Some banks ask for a self-declaration form signed and notarized. The process usually takes one to two weeks. Once the conversion is complete, your account will be flagged in the bank's system as NRI, and the rules for NRE or NRO accounts will explore. If you opened the account as a resident and did not convert it, the bank may eventually freeze it or restrict transactions. It is better to notify them proactively than to discover the problem when you try to transfer money.
Minimum balance, fees, and account maintenance
NRI savings accounts often carry a higher minimum balance requirement than resident accounts at the same bank. This varies by bank—some require 10,000 rupees, others 25,000 or more. If your balance falls below the minimum, the bank may charge a penalty fee each month, typically 500 to 1,000 rupees. Some banks waive the minimum balance if you maintain a certain monthly credit or set up automatic transfers.
You may also face fees for international transfers, account maintenance, or issuing a debit card. These fees are not standardized; they differ by bank and account tier. Before you convert your account, ask your bank for a written list of all fees that explore to NRI accounts. Some banks offer special NRI packages with lower fees if you maintain a higher balance or link the account to other products.
Tax obligations while you hold an NRI account
Interest earned on both NRE and NRO accounts is taxable income in India. You must report it on your Indian income tax return if your total income exceeds the filing threshold—currently 250,000 rupees per year for most individuals, though this varies by age and income type. Even if you live abroad and pay taxes there, you are still required to file in India because the account is in India and the income is earned there.
The bank will issue you a Form 26AS (tax credit statement) showing the interest credited and any tax deducted at source. Keep records of all transactions and interest statements for at least six years in case the Indian tax authority requests them. If you fail to file and the tax authority discovers unreported income, you may face penalties and interest charges on the unpaid tax.
What happens if you return to India and become a resident again
If you move back to India and regain resident status, you must inform your bank and request conversion of your NRE or NRO account back to a regular resident savings account. The conversion is usually free and takes a few days. Until you convert, the account remains subject to NRI rules—for example, you may not be able to use certain features or may face higher fees.
The money in the account does not change; only the account type and the rules governing it change. If you have an NRE account with foreign currency deposits, those will be converted to rupees at the current rate when you convert the account. If you have an NRO account, the rupees remain as they are.
Frequently Asked Questions
Can I open a new savings account in India if I am already an NRI?
No, you cannot open a regular resident savings account once you are classified as an NRI. You must open an NRE or NRO account instead. If you try to open a resident account, the bank will ask for proof of residency, which you cannot provide. You can open multiple NRI accounts at different banks if you need to, but each one must be designated as NRE or NRO.
What happens to my account if I don't tell the bank I moved abroad?
The bank may eventually discover your NRI status through address verification or when you attempt a transaction from abroad. At that point, they may freeze the account or restrict certain operations until you convert it to an NRI account. It is much simpler to notify them yourself when you move. If the account is frozen, you will need to contact the bank and provide proof of your residency status to unfreeze it.
Can I have both an NRE and an NRO account at the same time?
Yes, many NRIs maintain both. The NRE account holds money earned abroad, and the NRO account holds rupees earned in India. This allows you to keep the two income streams separate and manage them according to their different rules. You can transfer money between them, though some banks charge a fee for inter-account transfers.
Do I have to pay tax in both India and my country of residence on the same interest income?
You are required to pay tax in India on interest earned in Indian accounts. Your country of residence may also tax the same income. However, most countries have tax treaties with India that allow you to claim a credit for taxes paid in one country against taxes owed in the other, so you do not pay the full tax rate twice. Consult a tax professional in your country of residence to understand how the treaty applies to your situation.
Can I use an NRI account to receive money from family members in India?
Yes. Family members can deposit money into your NRE or NRO account through a regular bank transfer. There is no limit on how much they can send. However, if you then try to transfer that money out of India to a foreign account, the rules depend on the account type. NRE transfers are unrestricted, but NRO transfers are limited to $1 million USD equivalent per financial year and require RBI permission.