NRE or NRO Savings Account – Which one NRI should open? Differences

NRE or NRO savings account, which should I open is first doubt comes in mind of any Non Resident Indian (NRI), who wants to open saving accounts in India on Indian banks like ICICI bank, SBI bank, HDFC Bank, Kotak Mahindra Bank and several other public sector banks which offer this facility like Bank of Baroda. NRE and NRO are two kinds of accounts any NRI can open in India, NRE stands for Non Resident External while NRO stands for Non Resident Ordinary account, though both can be held by Indians there are many differences between them and based upon your need you need to choose to open either NRE or NRO account in India. Almost all major banks both public sector and private sector like SBI, HDFC, ICICI, Kotak Mahindra allow NRI Indian to open both NRE and NRO account.

Difference between NRE and NRO account for NRI Indians

Now let's see some differences between NRI and NRO account in India

1. The first difference between NRE and NRO account is how you deposit money. Only foreign currency can be deposited into NRE account while you can deposit Indian rupees in NRO account.

2. Interest rates on NRE and NRO accounts could differ currently many banks provide almost same interest rates on NRE and NRO accounts


3. Another significant difference between NRE and NRO account is that Money in NRE account is tax-free while its taxable in NRO account if you are maintaining any NRI fixed deposit in your NRE account then both interest and principle are tax-free while in case of NRO account interests are taxable.

4. If you are generating money from rents than you need to have an NRO account because INR currency can not be deposited into NRO account.

5) Once the money is in your NRE account you can transfer Indian Rupees (INR) to other accounts in India including NRO accounts. IF you are thinking to open NRE or NRO accounts choose banks like HDFC, Kotak Mahindra, and ICICI which has better customer support and net banking facilities.


6) If you want to send money abroad from India, NRE account can be better choice than NRO account which imposes a limit on how much amount you can transfer from India to abroad.

If you are now looking for what is the best bank to open NRE and NRO account, please check out that article, it compares three major privates banks HDFC, Kotak and YES bank on various factors which are important for NRI e.g. service, convenience, interest rates and support.

Here is a nice diagram to summarize difference between NRE and NRO savings accounts:

Frequently asked Question on NRE and NRO Account:

Here is a list of some of the common doubt among NRI customers related to NRE and NRO account with Indian banks :

1. Can I open both NRE and NRO savings Account in India ?

Yes you can open both NRE and NRO Savings account with one name, there is no restriction on that.


2. Does interest earned on NRE and NRO Savings account is Tax Free ?
Interest on NRE Savings Account is tax-free but on NRO savings account you need to pay tax much like any other Saving account in India.


3. Can I open NRE and NRO account in one Bank?
Yes, you can open both NRE and NRO account in the same bank. If you already have a resident saving account with any bank e.g. ICICI then just inform them about your NRI status and they will convert your resident saving account into an NRO (Non Resident Ordinary) account.


This is what I know about NRE and NRO account and what difference between them. There could be some more, if you know then please post as a comment. This will be a good reference point for any NRI Indians who are looking forward to opening NRE or NRO savings account in India. 

Even if you are thinking to open both NRE and NRO which is a good idea, Its beneficial to know limitations of your NRO savings account and what operations you can do and which transactions are not possible with NRO or NRE savings account.