InvestorQ : Who should open an NRO account?
divya Sing made post

Who should open an NRO account?

Answer
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Nitin Shah answered.
2 years ago


Non-resident ordinary (NRO) account is a type of account that an NRI is required to open in India to conduct any financial transactions. This is because the Indian government doesn’t allow NRIs to hold any savings accounts in their name if they have NRI status.

Essentially, NRO is the account that an NRI uses to manage the income earned in India.

Thus, an NRI should open an NRO account if he/she wants to:
- Keep the India-based earnings such as house rent, dividends, etc in India itself
- Have a separate account for deposit income earned in India
- Open an account with a resident Indian; this resident Indian has to be a close relative

However, unlike a non-resident external (NRE) account, charges are applied in an NRO account for repatriation.
NRE, or non-residential external, account is a type of savings account that NRIs or non-resident Indians have to open in India. This is in accordance with the Foreign Exchange Management Act (FEMA) guidelines that makes it illegal for NRIs to have saving accounts in their name in India.

Thus, all NRIs have to convert the money they earn abroad to an NRE or NRO, non-resident ordinary rupee (NRO) account.
If an NRI doesn’t open an NRE or NRO account, then he/she will have to pay hefty penalties on the savings account he/she continues to hold in India.