A Non-Resident (External) Rupee Account (NRE Account)

The interest rate on term deposit kept under NRE is generally higher than the interest rate on NRO deposits. Key features of NRE account are.

- Depending upon your need for interest returns, frequency of payments made using the account and liquidity; you can open NRE Current, Savings or Term Deposit accounts in India.

- Interest earned on balances in NRE Accounts is tax exempted.

- An NRE account cannot be held jointly with Indian residents.

- These account holders can grant a power of attorney or any such authority to any Indian residents for operating their NRE Accounts in India. However, such authority is restricted to withdrawals for local payments.

Disadvantages of NR(E) Account

- NRE Accounts are to be opened in Indian rupees (INR) and thus all foreign exchange remittances received for credit of that account are first converted to Indian rupees at the buying rates by the banks. The bank will permit any removal in foreign currency, by converting INR in the account to foreign currency at the selling rate. All balances in the account are held in INR and are thus exposed to exchange variation risk.