Banking Terminologies Every NRI Must Know

If you’re an NRI, the biggest mistake isn’t picking the wrong investment.
It’s using the wrong account.

In cross-border finance:

Account type = Tax impact + Repatriation rights + FEMA compliance

Here’s what actually matters.

1. NRE Account

For foreign income.

• Fully repatriable
• Interest tax-free
• Funded from abroad

Best for investing overseas earnings in India.

2. NRO Account

For Indian income (rent, dividends, pension).

• Interest taxable
• Repatriation capped at USD 1M per year

Mandatory if you earn in India.

3. FCNR Account

Foreign currency fixed deposit.

• No INR conversion
• No exchange rate risk
• Tax-free interest
• Fully repatriable

Ideal for parking foreign savings safely.

4. RFC Account

For returning NRIs.

• Hold foreign currency in India
• No forced conversion
• Useful during RNOR phase

Preserves flexibility after returning.

5. PIS + NRI Demat

Required for stock investing.

• Linked to NRE or NRO
• Resident Demat can create compliance issues

Structure decides whether funds are repatriable.

6. NPS & PPF

• NRIs can invest in NPS (rules apply)
• Cannot open new PPF accounts

The Practical Rule

Before investing, ask:

• Is the income foreign or Indian?
• Do I need repatriation later?
• What is the tax treatment?

Because in NRI banking,
structure comes before returns.