NRE Accounts in detail

As per the Foreign Exchange Management Act (FEMA) guidelines, an NRI cannot have a savings account in his or her name in India. He has to convert all his savings to a Non- Resident External Account which will enable him to send his foreign earnings to India at any point & also retain his income from India (via any assets) in the home country itself.

A Non-Resident External (NRE) account is a rupee dominated account opened by an NRI to facilitate deposit of foreign currency earnings & is primarily used for carrying out business, personal banking and making investments in India.


The main features of NRE account are listed below –

  • The account should be opened by the Non Resident account holder himself & not by the holder of power of attorney in India.
  • Two or more Non-Resident Indians can open a joint NRE account as long as all account holders are persons of Indian origin or nationality.
  • These accounts can be in the form of savings, current, recurring, or fixed deposits & the foreign currency deposited to this account is converted to INR.
  • The minimum period for term deposits is 12 months and the maximum period is 10 years.


The NRE account has the following benefits to the account holders –

  1. NRE accounts are exempt from tax. This means that both, the principal amount and the interest earned is free from tax.
  2. Funds held in this account including interest earned thereon are fully repairable.
  3. NRE Accounts can be used for personal purposes or for carrying on business activities in India. NRE Accounts are primarily used for making direct investment in India.
  4. Nomination Facility is also available for NRE accounts.
  5. NRE account is powered by internet banking to give 24×7 banking convenience to customers.


NRE accounts are subject to conversion loss and fluctuation in the value of rupee against a foreign currency . Hence , these accounts do not offer any protection against currency fluctuations, which are very volatile and prone to change on a daily basis.


Thus, in simple words an NRE (Non-Resident External) Account is an account exclusively for Non-Resident Indians which enables them to park and manage their foreign earnings in India, denominated in INR .

Accounting & Finance for Banking

Principles & Practices of Banking Module E Pdf

Module E PPB ePDFs available in our android app. Get them all at

Accounting and Finance for Banking Module A Pdf

Accounting and finance for bankers all ePDFs are available in our an app. Get them all at

Accounting and Finance for Banking Module A Pdf

Accounting and finance for bankers all ePDFs are available in our an app. Get them all at

Leave a reply

Please enter your comment!
Please enter your name here


Free Live Classes


More from author

All about KYC/AML Exam by IIBF

All about KYC/AML Exam by IIBF The KYC/AML is a professional certification exam in Anti Money Laundering and Know your customer conducted by the Indian...

CCP- Certified Credit Professional Course by IIBF

IIBF CCP (Certified Credit Professional) exam is an All-India Exam directed by the Indian Institute of Banking and Finance (IIBF) to select competent candidates...

What is Digital Banking in Detail

Digital Banking is the automation of traditional banking services. It is defined as banking done through the digital platform, doing away with all the...

Digital Banking Course By IIBF

Digital Banking Course By IIBF Certificate course in Digital Banking is conducted by IIBF to provide practicing bankers a sound foundation in the digital banking...