Whether you are an NRI or going to become an NRI, did you know that you cannot continue to hold your resident bank accounts? It is illegal for an NRI to continue to hold their normal resident bank accounts. On becoming NRI, FEMA (Foreign Exchange Management Act) regulations require you to inform, within a reasonable time, all banks, investment companies where you have a resident account, whether savings, fixed deposit and investments, about the change in your status. Remember! It’s your responsibility to inform banks/companies about the change in your resident status. The banks will re-designate your accounts as NRO (Non Resident – Ordinary). You can still continue to receive deposits earnings, pension, rental income etc. in such re-designated accounts. You can also continue to discharge your loan EMIs as before from this NRO account.


You can have these NRO account opened jointly with an Indian Resident. This makes your life easy in case of any income received, expenses incurred or payment has to be made and account holder presence required for some clarifications. It is also be advisable to give a power of attorney or letter of mandate to anyone of your choice to operate your NRE bank account.

You might want to read How & Why to open Non-Resident (NRI) Bank Accounts in India?

As your resident accounts either gets closed or re-designated as NRO, you can still use these accounts in the same way as you used it before becoming an NRI as stated above. And don’t worry, even after you become an NRI, you are free to deal with all your investments and assets you held prior to becoming an NRI any which way you desire. The only restriction is that the credits or any income in your NRO account is non-repatriable, that mean you can’t simply transfer these funds to out side India. But in a recent notification during year 2012 RBI allowed NRIs to transfer funds from NRO to NRE account; See the notification on May 7, 2012 RBI/2011-12/536 A. P. (DIR Series) Circular No.117 for this propose. It says, any repatriation done through NRO account should be reported to RBI by filling up prescribed forms.

You might want to read Use 15CA & 15CB forms to transfer funds to Non-Residents

One becoming NRI you will also have to file your tax returns in your new NRI status. If your Indian income is below the taxable threshold, there is no need to file the returns but it is prudent to do so for maintaining continuity. Also note, the tax deducted at source on NRO accounts is higher than domestic savings account of a resident. This means being a NRI and maintaining a resident savings bank account means that you are paying lesser taxes, which is not correct in the eyes tax law.

Read here the for the Most important points for NRI investors

Are you an NRI? Know why you shouldn’t hold Resident Bank accounts

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