India's global ties with the outside world has increased manifold in the present times. With Indian companies spreading globally and foreign multinationals setting foot here, many Indians are also moving abroad on multiple grounds.
Flow of foreign currency into the nation is important for every country's growth and India stands no different in this regard. The easiest way of attracting foreign currency into the country is through NRI banking. This is the reason why the government and thus banks lay impetus on the development of the NRI banking segment.
According to the Non-Resident (External) Account Rules established by Government of India in the year 1970, every person of Indian origin (PIO) living outside domestic boundaries can invest or remit funds to India.
NRI banking is allowed only to banks which have been given the authorized dealers' license by Reserve Bank of India.
There are three main types of NRI accounts offered to customers namely:
Non Resident Ordinary (NRO) account
Non Resident External Rupee (NRE) account
Foreign Currency Non Resident (FCNR) account
NRO account: Investment done in this account is non-repatriable that is income generated cannot be taken out of India without permission from RBI. Only interest earned is repatriable without RBI permission. Interest earned in this account is taxable.
This account deals in Indian currency.