NRE Account stands for Non-Resident External Account and is one of the 3 forms of NRI Bank Accounts in India.

NRE Account can be opened either in the form of Savings, Current, Recurring or Term Deposit Account. Such accounts can be opened only by the non-resident himself and not through the holder of the power of attorney.

NRE Account is a Rupee denominated account unlike FCNR Account which is operated in Foreign Currency.

Key Features of NRE Account

  1. The Balances held in the NRE Accounts are freely repatriable.
  2. The Interest earned and the balance held in the NRE Account is free from Income Tax as compared to Interest on NRO Account on which tax is levied. (Recommended Read: Benefit of opening NRO Account for NRI’s)
  3. NRE Deposits can also be withdrawn prematurely
  4. Loans can be extended against security of funds held in NRE Account either to the depositors or third parties.
  5. Such accounts can be operated through power of attorney in favor of residents for limited purpose of withdrawal of local payments or remittances through normal banking channels to the account holder himself.

NRE Account Interest Rates

As per RBI’s Master Circular dated 1st July 2006

  1. NRE Account Interest Rates on Saving Deposits should be at the rate applicable to domestic saving deposits instead of LIBOR/SWAP rate for 6 month maturity on US Dollar Deposit as was the custom earlier
  2. NRE Account Interest Rate for Fresh repatriable funds for 1 to 3 years should not exceed the LIBOR/SWAP Rates for US Dollar of  corresponding maturity plus 100 basis points

The Interest Rates for Non-Resident External Account (NRE) determined above for 3 year deposits would also be applicable to deposits for more than 3 years

Documents required to be submitted to open an NRE Account

Completed Application Form signed and attested by your banker/embassy of India/public notary must be accompanies with:-

  1. Copy of the Passport
  2. Copy of the Visa
  3. Latest Overseas Bank Statement in Original, latest overseas telephone/electricity bill in original as the residence proof

Control of NRE Accounts to the Power of Attorney Holder

A holder of Power of Attorney on behalf of the NRI/PIO is eligible to operate NRE Account provided that such operations are restricted to withdrawals for Local Payments. In case where the account holder is eligible to make investments in India, the power of attorney holder may be permitted by the authorised dealer branch to operate the account to facilitate such investments.

However, the resident power of attorney holder shall not be allowed to repatriate funds outside India held in Non-Resident External Account (NRE) under any circumstances other than to the Account holder himself nor to make payment by way of gift to a resident on behalf of the account holder or transfer funds from the account to another NRE Account

Foreign Currency Notes/ Travellers Cheque

The Proceeds of Foreign Currency Notes/ Travellers Cheques brought by the Account  Holder from abroad during his visit to India can be credited to the NRE Account provided they are tendered in person by the Account holder

Where the amount of Foreign Currency notes tendered exceeds $5000 or its equivalent or the total amount tendered i.e. currency notes and Travellers Cheques are in excess of $ 10,000 or its equivalent, it should have been declared to the Customs Department on the Currency Declaration Form (CDF) at the time of arrival in India.

Further in case of travellers cheque, they should be presented by the account holder himself and discharged by him in the presence of the official of the concerned branch