Home News 5 Dos and Dont’s to follow while opening NRO account

5 Dos and Dont’s to follow while opening NRO account


5 Dos and Dont’s to follow while opening NRO account: NRO stands for a Non-Resident Ordinary Rupee Account. An NRO account in India is a savings account for the Non-resident Indians who face issues in managing income or earnings in and outside India. Citizens of India who have settled abroad for an unlimited period of time (NRI’s) can face difficulties to manage bank accounts of two countries. He/She has to open an NRO account to manage any banking requirements that occur in the geographical territories of India. Such kind of accounts helps in serving benefits related to tax to the NRI’s and easy conversion between currencies. This type of account can be opened on a joint basis with a relative who is close to you, NRI, or a resident of India. But, one cannot transmit more than one million rupees in one financial year hence, there are restrictions on making overseas transactions. 

5 Dos and Dont’s to follow while opening NRO account

Benefits of having an NRO Account

The benefits are of having an NRO account are discussed below in detail.

  • Safeguarding earnings – The earnings made by the NRI’s are via let out rent, dividend income from stock market investments, etc, and they can be deposited to financial institutions only through an NRO account. Hence, ensuring the income accrued domestically is safeguarded.
  • Increased credit availability – A loan can be taken by an NRI against an NRO fixed deposit to meet emergency expenses in India or the country where they are residing. Rate of interest is lower than that of unsecured loans as the lines of credit are provided against collateral (eg.NRO FD).
  • Multiple account holders – Two or more people can open an NRO account jointly provided one of them is an NRI/PIP/OCI and the other individual can also be an Indian. If both the applicants of the joint account happen to live abroad, they can choose a person living in the account to ave the power of attorney for the operation of the account on domestic grounds. 
  • Ease of investment –Term deposits which have safe and assured returns be can be invested in by the NRI’s using the NRO accounts. Fixed and recurring deposit investments are included in this. Fixed Deposit accounts are covered by the Government of India upto a sum of Rs.1 Lakh in case the financial institution defaults of faults. This ensures high returns through investment in NRO accounts. 

The Do’s and Dont’s to follow while opening an NRO account include: DO’s:

  • Knowledge of the Withdrawal and Deposit Terms 

The knowledge of the terms of withdrawal and deposit terms in NRO account is very important. The deposits can happen in international and Indian currency as these accounts are used by NRI’s for their cash deposits. But the withdrawal can happen only in the Indian currency. Hence, the income originated in India can only be deposited in the NRO account. Since there is a limit of transmitting money, all the credits to the NRO account have to be made in Indian currency. For local payments, the NRO account can be debited and money can be transferred to other NRO accounts as well. 

  • Selection of a Power of Attorney

In case of an emergency like a financial crisis for the family, if the NRI isn’t present, it’s important there is someone to represent him/her who is generally given the Power of Attorney. This person could be a trusted advisor or a close relative so that action can be taken in case of your absence. 

  • Tax Benefits 

There are certain tax benefits that are available to NRI’s and understanding this becomes very important. The foreign currency that is saved over an income which is earned by the NRIs is taxable and it is charged on the earned interest & credit balances, subject to gift & wealth tax.  The tax charged over an NRO account can be deducted, depends on the current TDS rates, & the NRI’s get an option to avail Double Taxation Avoidance Agreement Facility or DTAA. This helps to avoid charges which are imposed on the interest that is earned through an NRO account and hence, checking for available tax deduction options is very important. DONT’s:

  • The correctness of Information submitted

The documents that are submitted by the NRI’s while opening the NRO Account should be accurate and without any errors. Failing to do so can cause issues & the account may stand a chance of being rejected. Photocopy of the valid visa, the Indian passport photocopy, the NRI status proof, proof of local or overseas address should be in order & submitted properly. The form for account opening might be rejected if any of the above documents are incorrect or not in place. 

  • Saving account in India

NRI’s arent supposed to have saving accounts in India on their name as per the FEMA (Foreign Exchange Management Act) guidelines. The NRIs must convert all of their savings from abroad to a Non-Resident rupee (NRE)/Non-Resident Ordinary Rupee (NRO). In case an NRI is found guilty of having an active saving account, a heavy fine can be imposed hence, it’s important to not have one on your name in case you are an NRI.

Previous article‘My pillar to lean on’: Ishaan Khatter thanks brother Shahid Kapoor, posts long note on Guru Purnima – bollywood
Next articleKevin Kelpinwietz
Pankaj Gola is co-founder of ChopNews. He is the brain behind all the SEO and social media traffic generation on this site.His main passions are reading books, cricket and of course blogging.


Please enter your comment!
Please enter your name here