NRO Account
NRO Full Form : Non-Residential Ordinary
What is NRO Account?
An NRO (Non-Residential Ordinary) account is a special type of bank account designed for Indians living outside of India. It allows them to manage their income earned in India and conduct financial transactions within the country.
Features of NRO Account:
1. Purpose: An NRO account serves as a medium for NRIs to manage their income earned in India, such as rent, dividends, pension, or any other form of Indian income.
2. Currency: The NRO account is maintained in Indian Rupees (INR) only. It cannot hold foreign currencies like US dollars or euros.
3. Types: NRO accounts can be opened as savings, current, fixed deposit, or recurring deposit accounts, depending on the requirements and preferences of the NRI.
4. Joint Accounts: NRO accounts can be held jointly with another NRI or an Indian resident. However, joint account holders need to be aware of the specific regulations governing the account.
5. Transaction Restrictions: NRIs can use funds from their NRO account to make payments in India. However, the use of these funds for certain restricted transactions, such as investments in Indian properties or shares, may require specific approvals from regulatory authorities like the Reserve Bank of India (RBI).
6. Documents Required: To open an NRO account, NRIs are generally required to submit copies of their passport, valid visa, proof of Indian origin, overseas address proof, and a recent photograph. The exact documentation may vary depending on the bank's policies.
Opening an NRO Account:
To open an NRO account, NRIs can approach any authorized bank or financial institution in India. It is advisable to research and compare the services, fees, and features offered by different banks before making a decision. Most banks provide online account opening facilities, making it convenient for NRIs residing abroad to initiate the account opening process.
NRO vs NRE Account
NRE (Non-Residential External) and NRO (Non-Residential Ordinary) accounts are two distinct types of bank accounts available to Non-Residential Indians (NRIs) for managing their finances in India. These accounts cater to different financial needs and have specific characteristics that set them apart.
| Factor | NRE | NRO |
|---|---|---|
| Purpose | To manage foreign income | To manage income earned within India |
| Currency | Maintained in foreign currency | Maintained in Indian Rupees (INR) |
| Repatriation | Funds can be freely repatriated to the NRI's country of residence without restrictions | Repatriation is subject to RBI regulations; limits apply |
| Income Sources | Primarily for income earned outside India | For Indian income sources (e.g., rent, dividends, pensions) |
| Taxation | Tax-free in India for both principal and interest | Taxable in India on the income generated |
| Suitable for | NRIs earning income abroad who need flexibility | NRIs managing Indian earnings |
