How to open an NRO account?

If you are an NRI settled abroad, then it is necessary for you to have an NRO account if you are also earning income via different sources in India. If you already have a savings account in India, you can get it converted into an NRO Account. Here are ten crucial things to know for an NRI regarding opening an NRO account:

  1. Denominated in Indian Rupees – NRO accounts are denominated in Indian rupees. Whenever any foreign currency remittance is received in an NRO account, the funds are converted to Indian currency at the prevailing exchange rates and credited to the NRO account.   
  2. Accepting Rupee Credits – An NRO account is regular savings account for the NRI account holder, wherein there are no restrictions for regular banking use. As such, NRO accounts can receive credits in foreign exchange and Indian rupees both. Thus, NRO accounts are helpful for the NRIs if they have money through banking channels from within India. Such sources of credits may include sale proceeds of the property, the redemption of investments, dividend income from Indian companies, rental income, etc.
  3. Funding an NRO account – When the residential status of individual changes from resident Indian to NRI, all the banking accounts are, by default, changed into NRO accounts. There are no restrictions to NRO accounts concerning its funding. As such, funds can be transferred into an NRO account from another NRO/ NRE account or any other regular bank account.
  4. Repatriation of funds outside India – The account holders cannot freely repatriate the account balance outside India from their NRO accounts. The funds can be transferred outside India only subject to procedural compliances and within specified limits for the principal amount. However, the interest income from such accounts is freely repatriable.
  5. Utilization of the Account Balance in India – NRO accounts are most flexible in utilizing the funds within India. Like a regular savings bank account for resident Indians, the NRO account balances can be freely used within India. 
  6. Joint Operations – One can hold an NRO account jointly with another resident Indian or NRI. There is no restriction in having joint operations with another resident Indian. 
  7. Nomination – Having a nominee for the bank account is always helpful in life contingencies. The NRI can appoint any resident Indian or an NRI as a nominee for their NRO account. 
  8. Taxation of Interest Income – While Indian tax laws provide tax benefits to the interest income from NRE accounts and FCNR deposits, no tax exemption is available for the interest income from NRO accounts. The NRI account holder must pay income tax as applicable on such interest income. 
  9. Foreign Currency Loan against Account – Owing to the repatriation restrictions for the NRO account balances, such balances cannot be pledged against foreign currency loans taken outside India. 
  10. Opening an NRO Account – One can open an NRO account by visiting ICICI bank’s website or through the ICICI Bank Netbanking portal. An NRI must upload KYC (Know Your Customer) documents, including attested passport copy, proof for NRI status, proof for residential address abroad, copy of VISA, FATCA declaration as applicable, PAN (Permanent Account Number) etc. Post the submission of KYC documents on the portal; a callback from a bank official can be arranged to further help with pending requirements, if any. The account opening process is straightforward, and one can also open an NRO account in India while being away from the country. 

The information provided in this article is for informational purposes only. You may consider consulting tax professionals for specific guidance for the applicable Income Tax rules, as tax benefits are subject to changes due to change in tax laws.  

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