NRE full form meaning & significance

Aug 11, 2022

NRE Full Form 

NRE – Non Resident External Account  is an account of an NRI to transfer foreign earnings to India

NRE Account

The NRE account is an Indian rupee-denominated account, offering complete security. These accounts can be in the form of savings, current, recurring, or fixed deposits. The foreign currency you deposit into the account is converted to INR. You can transfer your funds (Principal & Interest amount) to a foreign account from an NRE account without any complications and restrictions. You need to note that the amount you deposit into these accounts must be earned outside India. The international debit card enables you to transact and withdraw money 24*7. Also, mutual fund investments become effortless and instant if you link your NRE account number to the investment account. NRE account is primarily used for carrying out business, personal banking and making investments in India.

Why do you need a Separate ?

Following the Foreign Exchange Management Act (FEMA) guidelines, the Reserve Bank of India allows an NRI to open two types of savings bank accounts with authorized dealers and banks: A Non-Resident External (NRE) Rupee account and a Non-Resident Ordinary Rupee (NRO) Account.

The RBI states that an NRE account should be opened by NRIs themselves1. It does not permit the holder of a power of attorney to open these accounts. So, if you don’t already have one, make sure you open one on your next visit.

Depositing and withdrawing money 

Apart from remittances to India, the account allows you to make foreign currency deposits during your visit to India. It permits you to transfer from another NRE or Foreign Currency Non-Resident (FCNR) bank account. Personal cheques, travelers’ cheques and bank drafts drawn in any foreign currency can be deposited by you in person. However, banks have to be provided with proper documentation to prove that you are an NRI.

Interest earned on the funds in your account, proceeds from the sale of FDI investments, interest and dividends from other assets can be seamlessly credited to an NRE account.

You can also withdraw money from this account for local disbursements, remittances outside India, investment in shares, purchase of immovable properties or transfer to other NRE/ FCNR accounts.

Joint Acc. 

Two or more Non-Resident Indians can open a joint NRE account as long as all account holders are persons of Indian origin or nationality. If one of the joint account holders becomes a resident Indian, then the banks have the option to delete his/her name and allow the account to continue as an NRE account. Another option is to convert the account into a resident Indian account by removing the NRI holder’s name.

Please note that an NRI has an option to open an NRE account jointly with a resident Indian only in former or survivor mode of operation

Final Note

If your total income includes income earned in India and you want to manage it within the country, you can opt for an NRO account. An NRE account can be opened if you want to transfer your foreign income to India and want to avoid taxation liabilities. They are both a variation of savings accounts. And there are different investment avenues open to NRIs where these accounts can help in seamless transactions such as P2p Lending.

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