The full form of NRE is Non-Resident External. This means that this account is specifically for Non-Resident Indians (NRIs), who live abroad and earn there. An NRE account is a bank account where you can deposit your foreign earnings (such as salary, business profits) in a foreign currency (such as US Dollar, Euro), and the money is converted into Indian Rupees.
You can open an NRE account with almost all banks in India – such as SBI, HDFC, ICICI, Axis, and Kotak Mahindra. This account can be opened in the form of savings, current, or fixed deposit (FD).
Who can open an NRE account?
NRE accounts are only for Non-Resident Indians (NRIs) and Persons of Indian Origin (PIOs). So if you are an Indian and are living abroad (for work, education, or business), then you can open this account. But if you are living in India, then you cannot open this account.
If you live abroad for more than 182 days (in a financial year), then you are considered an NRI, and you can open this account.
Key Benefits of NRE Account
- Tax-free interest: The interest earned on NRE account is tax-free in India. This means that you do not have to pay income tax in India on the interest you earn on NRE savings or fixed deposits.
- Fully repatriable: You can repatriate the money in the NRE account abroad at any time – both the principal amount and the interest. This means that if you want to send your money back to your overseas account, there will be no problem.
- Good interest rate: You get 6-7% interest on NRE fixed deposits, which is higher than a normal savings account. For example, SBI offers 6.5-7% interest on NRE FD for 1-5 years (as of March 2025).
- Joint Account and Management: You can open an NRE account as a joint account, but the other account holder also has to be an NRI. Also, you can give a power of attorney to anyone in India, so that they can manage your account.
Link: What is an NRE Account?
Some Disadvantages of NRE Account
- Currency Risk: The money in NRE account is kept in Indian Rupees, and if the value of Rupee depreciates, you can suffer a loss. For example, if you deposit 1,000 US Dollars, and then 1 Dollar = 83 Rupees, you will get 83,000 Rupees. But if later 1 Dollar = 80 Rupees, you will get less money when you send it back.
- Cannot deposit from India: You can deposit money in NRE account only from abroad. You cannot deposit money earned from India (like rent, dividend) in this account.
- Minimum Balance: Some banks require a minimum balance for NRE account. For example, in HDFC you have to maintain a minimum balance of Rs 10,000, otherwise you will be penalized. But in SBI the minimum balance is Rs 3,000, which is comparatively less.
Low credit score? Find out how to Improve Credit Score with 6 simple steps!
How to open an NRE account?
Step 1: Select the bank
Select the bank in which you want to open an account – SBI, HDFC, ICICI, Axis, or Kotak.
Step 2: Fill the online form
Go to the bank’s website, and fill the online form for an NRE account. Provide your name, address, passport details, and foreign account details.
Step 3: Submit KYC documents
You will need to provide your passport, visa, proof of address abroad (like utility bills), and PAN card. You can upload all of these online.
Step 4: Activate account
Once your KYC is verified, your account will be activated. The account will get activated in 3 days, and you will also get a debit card.
Want to travel abroad? Here are the top 10 best forex cards in India!
NRE Account vs NRO Account: What’s the difference?
- NRE Account: You can deposit only money earned abroad, the interest is tax-free, and the money is fully repatriable.
- NRO Account: You can deposit money earned from India (like rent, dividends), the interest is taxed, and there are limits on repatriation (US$ 1 million per year).
Some important things to keep in mind
- Keep an eye on currency rates: If you want to remit money, check the currency rates.
- Check the bank service: ICICI and HDFC have very good online services, but check if they have a branch near you.
- Take tax advice: Even though NRE accounts are not tax-free, they may be taxed in your foreign country.
Final Words!
NRE accounts are very beneficial for Indians living abroad. My friend was able to easily bring his earnings back to India with this, and it did not even attract tax. If you are an NRI, and you want to manage your overseas earnings in India, then definitely open an NRE account. If you have any more questions, do not hesitate to ask me. I’ll tell you in simple terms!