Yes. An NRI can maintain eligible bank accounts in India, but not an ordinary resident savings account after becoming a person resident outside India under the Foreign Exchange Management Act, 1999, or FEMA.

The two main rupee savings-account options are the Non-Resident External, or NRE, account and the Non-Resident Ordinary, or NRO, account.

The right account depends on where the money was earned. You should consider the permitted source of funds, whether the money needs to be sent abroad, its Indian tax treatment and the bank's KYC requirements.

Can NRIs Keep a Regular Resident Savings Account?

No. When a resident Indian becomes a person resident outside India under FEMA, the account holder should promptly notify the Bank of the change in residential status under FEMA.

The bank may either redesignate the existing account or follow another operational process, such as opening an appropriate account after completing the required formalities. The exact steps may vary from bank to bank. However, continuing to operate a resident savings account after becoming a person resident outside India, without informing the Bank and completing the required formalities may result in non-compliance with applicable FEMA requirements and may result in consequences prescribed under FEMA, including penalties, wherever applicable.

What is an NRE Savings Account?

An NRE (Non-Resident External) Savings Account helps NRIs keep eligible overseas earnings in India in Indian rupees. The principal and interest are fully repatriable, and the interest earned is exempted from tax in India, subject to prevailing tax laws.

Permitted Credits to an NRE Account

Permitted credits may include:

• Eligible inward remittances from outside India through banking channels
• Transfers from other NRE or FCNR(B) accounts
• Interest on the account and eligible investments
• Maturity proceeds of investments made using NRE funds or inward remittances
• Current income like rent, dividend, pension, interest etc.

Only permitted credits that retain their repatriable character should be routed to an NRE account.

NRE Repatriation and Tax Treatment

Eligible principal and interest held in a compliant NRE account are repatriable outside India. Remittances remain subject to applicable FEMA Regulations, RBI directions and Bank's applicable regulatory and compliance requirement including routine checks, KYC, sanctions screening and source-of-funds verification.

Interest earned on an NRE account is exempt from income tax in India, subject to applicable conditions prescribed under the Income Tax Act. The account must also continue to meet the applicable FEMA and RBI requirements governing NRE accounts.

However, depending on the tax laws of the account holder's country of residence, such interest may be required to be reported and may be subject to tax in that jurisdiction.

What is an NRO Savings Account?

An NRO Savings Account helps NRIs manage money received/earned in India. The interest is taxable in India and is subject to TDS, while overseas remittances are subject to FEMA, tax and documentation requirements.

Permitted Credits to an NRO Account

Permitted credits may include:

• Inward remittances from outside India
• Legitimate dues in India
• Transfers from other NRO accounts
• Other permitted amounts, including eligible gifts or loans from a resident to an NRI/PIO relative under the applicable rules

Proceeds from the sale of property or other assets, inherited funds and business-related receipts may require additional FEMA and tax regulations and source-of-funds documentation. 

These amounts should not all be described as "income". For example, property-sale proceeds and inherited assets are capital or asset-related receipts and may be subject to separate conditions.

How NRO Repatriation Works

NRO repatriation has two important routes.

1. Remittance of Current Income

Current income may generally be remitted outside India after applicable tax and documentary requirements have been met. This route is separate from the USD 1 million asset-remittance facility.

2. Eligible NRO Balances and Assets

An eligible NRI or PIO may remit up to USD 1 million in a financial year, from April to March, in aggregate from eligible NRO balances and specified assets. These may include qualifying asset-sale proceeds and inherited, legacy or settlement assets.

The remittance is subject to:

• The FEMA Remittance of Assets Regulations
• Documentary evidence supporting the source and acquisition of the funds
• Applicable Indian tax compliance
• Verification by the authorised dealer bank on documentation, compliance and remittance procedure

A transfer from an NRO account to an NRE account may also be made within this USD 1 million facility. The limit is not available separately for each NRO account or each bank. A remittance above the permitted amount may require RBI approval where allowed under the regulations.

The bank may request evidence of the source of funds, payment or provision of tax and the prescribed tax-remittance information or certificate etc.

For remittances made on or after 1 April 2026, the forms prescribed under the Income Tax Act, 2025 and Income-tax Rules, 2026 shall apply. The exact requirement depends on the nature, taxability and amount of the remittance.

NRE vs NRO Savings Account: Key Differences

Which Account Should You Choose?

An NRE account may be appropriate when you primarily want to maintain eligible repatriable funds in Indian rupees and meet the applicable eligibility conditions under FEMA. Balance in an NRE account is freely repatriable, subject to applicable laws.

An NRO account may be appropriate when you need to manage income earned in India or undertake other permissible rupee transactions. Repatriation from an NRO account is subject to applicable FEMA regulations, prescribed limits and documentation requirements.

The appropriate account depends on your residential status under FEMA, source of funds, and the intended use of the account. If you are unsure which account is suitable for your circumstances, please consult your financial advisor.

Final Thoughts

NRIs can hold savings accounts in India, but the account type must match their residential status under FEMA, the source of the funds and the intended use of the account.

An NRE account is generally suitable for maintaining eligible foreign earnings remitted to India and offers repatriability in accordance with applicable FEMA regulations. An NRO account is generally used for managing income earned in India and for other permissible rupee transactions.

If your residential status changes from resident to non-resident or vice versa, you should promptly inform your Bank and redesignate your account, as applicable, in accordance with FEMA requirements.

Before remitting funds outside India, it is advisable to determine the nature of funds (for e.g., current income or other balances), the applicable FEMA provisions, documentation requirements and tax implications. Where required, customer should seek professional tax or legal advice.

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