“It is a wise man who lives with money in the bank, it is a fool who dies that way.” ~ French Proverb
The NRI Bank account is one of the features of Indian banking system that is quite useful for Indians living abroad or traveling all over the world. For those who have one leg in India and the other abroad – especially with banking needs on both sides of the ocean – the NRI account can be a handy tool. Some of the key benefits include:
Convenience: NRI account provides access to the banking system depending upon the local and foreign needs. It allows quick transfer of funds and exchange of currencies.
Time Saving: It gives easy access to your funds. You don’t need to run to a Union bank or call a friend in the middle of the night for a favor.
Diversification: Many of us, who have been scared by the banking system melt-down in Europe or North America, this is one more way to diversify the savings or bank accounts.
Interest: NRI bank account allows ability to compare interest rate and earning potential between home and abroad.
Currency Hedge: This also provides the advantage of minimizing the risk of currency rate fluctuations. If some of your savings are in rupees in India, and rest in dollars in US, then you are effectively hedging against any downward slide in dollar. This could also work against you if dollar value goes up.
Key steps to open an NRI Bank Account
To open the NRI account, following are the main steps:
1. NRI Or PIO status: The NRI status is pre-requisite for the account application. Make sure you qualify, especially if you have been out of India only for a short period as a visitor. For details, refer to the frequently asked questions on the official site of Indian Government . The web-site also covers information for a person of Indian Origin (PIO) and the qualifications for the account.
3. Bank selection: Based on personal or geographical preferences, choose a bank that is right for you. Many of the banks have lots of information online as well. Make sure that the bank is authorized by the Reserve Bank of India (RBI) for NRI accounts.
4. Account type: All of the major banks provide lots of information to complete the application and to select what type of account you should open based on your financial situation and the country you live in. I can go on-and-on…, but RBI has quite a bit information on its site under ‘Features of various Deposit Schemes available to Non-Resident Indians (NRIs)’. Very detailed information indeed.
5. Account application: Most of the banks will provide online as well as on-site (at the bank) help on this. The banks also provide the list of documents or IDs required to complete the application. Interest rate and other information on the banking rules is available from the bank; the same is also available on their web-sites. Earnings on the NRI account may be subject to income tax; make sure to check this with the bank and your country of residence.
A word of caution: You may find lots of middlemen calling or approaching you to help open the account. This is no rocket science, avoid the middlemen to minimize any banking frauds.
Related Resources: The following on-line resources are quite useful for NRI Bank Account info:
1. Government of India: Overseas Diaspora
2. RBI web site – FAQ for NRI accounts.
3. ICICI Bank: NRI Accounts
4.State bank of India : NRI Services – FAQ
5.HSBC NRI Services
6.Citibank NRI accounts
You may also want to take a look at the follow-up post on Bank account and FAQ linked here