NRI banking is a pivotal vertical of the Indian banking and financial system. It exclusively caters to the banking requirements of Non-Indian Residents, Persons of Indian Origin, and Overseas Citizens of India. A separate vertical dedicated to NRI banking was necessary since different rules and regulations govern its activities. Furthermore, it comprises specialised banking products and services that simplify banking for NRIs.

An NRI Account is a core product of NRI banking. It is much like a resident Bank Account but includes unique features and benefits that make it one of a kind for NRI banking. Opening an NRI Account is a prerequisite for banking in India. Hence, open an account if you haven’t yet. You can open two types of NRI Accounts: Non-Resident Ordinary and Non-Resident External Accounts.

These two accounts differ concerning deposit suitability, taxation, and repatriation. Before opening a suitable account, consider your banking requirements.

What happens to your NRI Account when you return to India?

After spending years as an NRI living in a foreign country, you may want to return back to India. You can do so. When you return to India, your citizenship status changes from being an NRI to a resident of India. Several changes in every area of your life follow this citizenship status change. One of the changes is that you cannot continue holding an NRI Account. You must close or convert the NRI Account to a resident Bank Account.

Doing so is mandatory as per the governing laws. You will face financial and legal consequences if you fail to do so. Avoid putting yourself in such a situation, close your convert your NRI Account on priority on your return to India. As an NRI, you may also hold NRO, NRE, or FCNR Deposit investments in India. These NRI FDs fetch you a competitive interest rate, facilitating systematic wealth creation.

The NRO and NRE FDs are held in Indian Rupees, while you can hold the FCNR Deposit in a foreign currency of your choice. The interest earned from an NRO FD is taxable in India. Depending on the implementation of the Double Taxation Avoidance Agreement, it may also be taxable in your country of residence. However, the interest earned from an NRE Deposit and FCNR Deposit is 100% tax-free, allowing you to enjoy the returns to the fullest.

While holding an NRI FD is very advantageous, you cannot continue to hold it when you return to India and become an Indian resident again. Like the NRI Account, you need to close or convert your NRI FD into a resident FD. As mentioned, doing so is a legal obligation. A simple procedure is all you need to follow to close or convert your NRI Account/ NRI FD into a resident Bank Account/ FD. Visit the nearest bank branch or log on to online banking platforms to complete the procedure.