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🏦 Step 2 of 4 · Banking

NRE, NRO, FCNR, RFC — which one do you actually need?

Four account types, four jobs. NRE for foreign income (fully repatriable, tax-free). NRO for Indian income (rent, dividends, pension). FCNR for parking foreign-currency savings. RFC once you move back. Most NRIs need a combination — here's what each does and the combo that fits your situation.

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Quick comparison

The 30-second version. Scroll down for full details on each.

Account What it holds Repatriable Interest taxed? Most NRIs need it?
NRE Foreign earnings (USD/GBP/AED) converted to ₹ ✓ Fully (no cap) ✗ Tax-free in India Yes
NRO Income earned in India (rent, dividends, pension) Capped at $1M / FY 30% TDS If you have any Indian income
FCNR Foreign-currency fixed deposits (USD, GBP, EUR, etc.) ✓ Fully (no cap) ✗ Tax-free in India Optional · for $50K+ idle savings
RFC Foreign-currency funds after you move back to India ✓ Fully (no cap) Depends on RNOR window Only after returning to India
The combination most NRIs need

NRE + NRO together at one bank

If you live abroad and have ANY rupee income in India (rent from a property, dividend from Indian shares, gift money, pension), you need both. NRE for your foreign salary, NRO for the Indian income. Most banks bundle them as one combo with a single login. Add FCNR only if you're parking $50K+ in idle USD/GBP/EUR savings — it earns 5–6% tax-free, vs the ~0% you get sitting in your foreign chequing account.

The four accounts in detail

Tap any row to expand. Each has different rules around who can open it and what you can deposit.

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NRE Account · Non-Resident External
Money you earn abroad
Everyone needs this +

For foreign income brought into India — your overseas salary, Wise/XE transfers, remittances. The principal converts to rupees on deposit; interest is paid in rupees and is tax-free in India.

  • Principal and interest fully repatriable — send it back anytime, no cap
  • Cannot deposit Indian-source income here (rent, dividends, gifts) — that's a FEMA violation
  • Joint account with another NRI only (no resident Indian)
  • Best account to receive your inward Wise / Remitly / XE / bank-wire transfers into
  • Minimum balance: NIL at IDFC First and Federal Bank · ₹10,000 monthly avg at ICICI/HDFC/Axis · ₹25,000 at Kotak · ₹3,000 quarterly at SBI
Who can open one
Indian passport holders living abroad: just passport + foreign address proof. OCI not required. · Foreign passport holders of Indian origin (US, UK, Canada citizens etc.): need an OCI card to qualify as NRI under FEMA. · Foreign nationals without Indian origin: not eligible.
Best for NRE: ICICI Bank — online opening, no India visit needed Open ICICI NRE →
🇮🇳
NRO Account · Non-Resident Ordinary
Income you earn in India
If you have Indian income +

For rent, dividends, pension or any rupee income earned inside India. Required if you own property and receive rent. Can be held jointly with a resident Indian.

  • Repatriation capped at $1M per financial year after taxes (use Form 15CA + 15CB to remit)
  • Interest subject to 30% TDS (tax deducted at source); reconcile via your Indian ITR
  • Required if you own property and receive rent
  • Can be held jointly with a resident Indian (spouse, parent, sibling)
  • Minimum balance: usually ₹10,000 monthly avg even at zero-balance NRE banks. SBI: ₹3,000 quarterly metro. NRO is rarely zero-balance because banks expect rupee inflow activity.
Who can open one
Same eligibility as NRE: Indian passport holders living abroad (no OCI needed) · Foreign passport holders of Indian origin (need OCI). Most NRIs hold both NRE + NRO at the same bank as a combo account.
Best for NRO: HDFC Bank — strong branch network for property income, easy joint-with-resident setup Open HDFC NRO →
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FCNR Account · Foreign Currency Non-Resident
Keep savings in your currency
Optional · for large USD savings +

A fixed deposit held in foreign currency — USD, GBP, EUR, AUD, CAD, JPY. No rupee conversion risk on your principal. Ideal for parking savings you don't need for 1–5 years.

  • Available in USD, GBP, EUR, AUD, CAD, JPY
  • Interest paid in same currency, tax-free in India
  • Fixed tenures: 1–5 years only (not a current account)
  • Good for large lump sums you won't touch
  • Minimum to open: typically $1,000 USD or equivalent (£1,000 / €1,000 / AED 5,000)
Same currency, ~50–75 bps higher: GIFT City IBU FDs
USD FDs at GIFT City IFSC Banking Units (HDFC, ICICI, Kotak, SBI all run IBUs) typically pay 50–75 basis points more than equivalent FCNR. Compare GIFT City IBU vs FCNR →
Best for FCNR: IDFC First Bank — highest rates, up to 5.10% p.a. on USD Open IDFC FCNR →
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RFC Account · Resident Foreign Currency
For after you move back to India
Returnees only +

An RFC account is for NRIs who have moved back to India permanently. It lets you continue holding foreign-currency funds (from FCNR rollover or remaining overseas balance) without forced conversion to rupees.

  • Available to "returning Indians" — anyone who lived abroad as NRI then returned
  • Held in USD, GBP, EUR, AUD, CAD, JPY, SGD
  • Funded from existing FCNR maturity or overseas account closure
  • Interest treatment depends on RNOR (Resident but Not Ordinarily Resident) status — typically tax-free for the first 2–3 financial years after return, then taxed in India once you become "Resident Ordinarily Resident"
Trigger to convert NRE/NRO → resident or RFC
Once you cross 182 days back in India in a financial year, you become a tax-resident and your NRE/NRO accounts must be converted within 30 days. Check the 182-day calculator →
For RFC: SBI and Union Bank both handle resident conversions — widest branch network Open SBI RFC →

Three common confusions, sorted

The questions readers ask after reading the rules.

Can I deposit foreign salary into NRO?

Technically yes, but it's a financial mistake. Foreign salary in NRO traps it under the $1M/year repatriation cap and exposes the interest to 30% TDS. The same money in NRE is fully repatriable and earns tax-free interest. Foreign income belongs in NRE.

Can I deposit Indian rent into NRE?

No. Indian-source rupee income (rent, dividends, gifts, pension) into an NRE account is a FEMA violation. Open an NRO account for the rent, leave the NRE for foreign earnings. The two work together; they're not interchangeable.

Can a foreign passport holder (US/UK/Canadian citizen) open NRE?

Only with an OCI card. FEMA defines NRI as either an Indian citizen abroad OR a foreign citizen of Indian origin holding OCI. Without OCI, foreign citizens are treated as foreign nationals, not NRIs, and can't open NRE/NRO accounts (only specific FEMA-permissible foreign-direct-investment routes apply).

Next: pick your bank and open the account

Now that you know which type(s) you need, the four-step path continues:

Step 1
Do you need an Indian bank account?
Eligibility, decision tree, when you can skip it.
Step 3
What documents you'll need
PAN, passport, OCI, address proof — the KYC stack.
Step 4
Best NRI banks compared
8 banks ranked, FD rates, US-NRI compatibility.
Hub
Banking overview
All four steps in one place. Start here if unsure.