NRE, NRO or FCNR: Account Selector

What the NRI account selector does

If you are a non-resident Indian with money to hold in India, the practical question is rarely “which account has the best rate?” It is which account is even permitted to hold this particular money — because Indian exchange control, not your preference, decides that. This tool walks you through five plain questions and returns the account, or the combination of accounts, that follows from your answers, together with the reasoning: repatriability, how the interest is taxed, the currency you end up carrying the risk in, and what changes if you return to India for good. It is built for someone with real money to place — overseas savings to bring in, Indian rent or dividends arriving, or both at once — rather than for browsing. It draws on the same framework set out in our guide to NRE, NRO and FCNR accounts, in the wider NRI centre.

How it works: a decision tree, not a calculator

Deliberately, the tool carries almost no numbers. Repatriation ceilings, permitted currencies, interest-rate ceilings and the prescribed certification forms are set by the Reserve Bank of India and the Central Board of Direct Taxes and are revised from time to time, so hard-coding them on a regulated page would let them decay silently. Instead it works as a decision tree over five questions:

• Where the money comes from. Foreign-sourced, arising in India, or both. This is the main line Indian exchange control draws, and it usually settles most of the answer on its own.
• Whether you need to get it out again. Freely, possibly one day, or not at all — because repatriability is the axis on which the three accounts differ most.
• Which currency you want to carry the risk in. Rupees or a foreign currency. This is the one genuine choice the framework leaves open, and it is what separates NRE from FCNR(B).
• Whether the foreign-currency portion can be fixed for a term. Asked only when it is relevant, because FCNR(B) exists solely as a term deposit — there is no current or savings version of it.
• Whether you plan to return to India permanently. Which determines how soon redesignation, maturity and the move to a resident foreign-currency account come into play.

The logic then assigns each pound, dollar or dirham to the account that is permitted to hold it. India-source income is directed to an NRO (Non-Resident Ordinary) account, its only permissible destination. Foreign money you want in rupees, with full repatriation freedom and the flexibility of a savings or current account, goes to an NRE (Non-Resident External) account. Foreign money you would rather keep in its own currency, and can fix for a term, goes to an FCNR(B) deposit. Because a single set of facts can involve more than one kind of money, the answer is often a structure — an NRO alongside an NRE, or an NRE and an FCNR(B) side by side — rather than a single account.

The one place the tool refuses to choose for you

Where more than one answer is genuinely legitimate, the tool says so rather than inventing a preference. The clearest case is currency. If you have no strong view, NRE and FCNR(B) are both open to you: both take only foreign-sourced money, both repatriate freely, and interest on both is exempt from Indian income tax while you are non-resident. An NRE account converts to rupees now and back at an unknown rate later; an FCNR(B) deposit removes that exchange-rate variable but ties the money up for a term. Splitting the balance between the two is common and permissible, and the right split is a planning question about where your future spending will fall — not a rule the tool can settle.

Reading your result: a worked example

Suppose you earn in the UK, want to move some savings into India, and also let out a flat in Mumbai. Answer “both” on source, and the tool immediately tells you this is two different kinds of money that are not allowed to share an account, so the answer is a structure. The Indian rent must land in an NRO account, where interest is taxable and your bank deducts tax at source; the UK savings go to an NRE account if you are comfortable holding rupees, or split into an FCNR(B) deposit if you would rather stay in sterling and can fix part of it for a term. The result then flags the trap that catches the most people: do not route the Mumbai rent into the NRE account to make it easier to send abroad. NRE credits are restricted to foreign-sourced funds, so that credit is impermissible the moment it is made — and once foreign and Indian money are commingled, the balance takes on the more restricted India-source character permanently. The output also gives you the dates that decide things, chief among them the date your FEMA residential status changes, which triggers redesignation and ends the NRE interest exemption.

Assumptions and limits

• It cannot tell you whether you are non-resident under FEMA on a given date. FEMA defines residence differently from the Income-tax Act — including a purpose-of-stay element — and it is entirely possible to be non-resident for one and resident for the other. Start with the India residential status test if you are unsure which side of the line you sit.
• It states no ceilings, rates, permitted currencies or form numbers, on purpose. Confirm the current position with your authorised dealer bank or an Indian chartered accountant before acting.
• It does not address the taxation of the underlying income, treaty analysis, or how the balances must be reported in your country of residence. Where a treaty could improve the position on taxable NRO income, our DTAA article finder identifies the governing article and the paperwork behind a claim.
• Individual bank policy can be stricter than the regulation, and documentation practice varies between banks. Where a bank’s policy is tighter, that is what you will actually encounter.

Why it matters, and what to do next

Account structure is usually settled early and then left alone — until something goes wrong at the point of repatriation, often years later, when a single misdirected credit turns into a query against a whole account. Getting the design right at the outset is far cheaper than unpicking it afterwards. A sensible sequence is: confirm your residential status; run each income stream through this selector to see where it belongs; keep Indian and foreign money in genuinely separate accounts; and, if a return is on the horizon, plan the redesignation, any FCNR(B) maturity and the move to a resident foreign-currency account deliberately. If you expect to move money out of India, check how much you can remit this year with the repatriation headroom tool, and read repatriation from India for the full process. Returning residents should also see how long their sheltered window lasts with the RNOR expiry calculator. This tool gets you to the right account, and the reasoning behind it, and stops honestly where the current numbers begin.