NRO Account, Its Functions and Who Needs to Have One

Use Cases of NRO Account

A classic example, if an NRI owns a house in India and rents it out, the rent must be deposited into the NRO account. Other cases can be, if a person who now lives abroad, but receives a pension from the Indian government, this pension must go into an NRO account. Similarly, interest income, dividends from shares or money from any Indian business should be managed through an NRO account.

Even if an NRI wants to keep a small amount of money in India for emergencies or family expenses, an NRO account is the right choice. It is also useful when NRIs want to allow family members in India to access funds, because the account can be operated jointly with a resident Indian.

Resident Indians must convert their normal savings account into an NRO account once their residency status changes to NRI. This is required by law, and keeping a regular savings account after becoming an NRI is not allowed.

Benefits of Having an NRO Account

An NRO account is designed by law to facilitate easy funds transfers while adhering to regulatory norms. Here are some benefits of an NRO account.

Convenience to Manage the Money Earned in India

One major benefit is that it allows easy handling of income earned in India while living abroad. All Indian earnings can be deposited into this single account. The account also provides regular banking services like a debit card, ATM withdrawal and online banking, making it easy to manage the money from anywhere in the world.

Managing Account with Joint Holder

NRO accounts can also be held jointly with a resident Indian. This makes it easier for family members to manage the local expenses of the NRI when the account holder is not around. Say, for eg, an NRI own a house in India which now needs some maintenance. So, NRIs need not send funds to the concerned person here. A joint holder can simply withdraw funds from the respective NRO account and carry out the needful maintenance.

Managing Investments in India

An NRO account can be linked to various investment products like mutual funds, fixed deposits and trading accounts. This allows you to continue investing in India while managing everything from one account.

Currency Flexibility

NRIs deal in multiple currencies and an NRO account gives great flexibility where both Indian income and foreign remittances can be deposited.

Repatritation

Another benefit is the repatriation of money. This means NRIs can transfer money from their NRO account to their foreign bank account, subject to RBI rules. After paying applicable taxes, up to US dollar 1 million per financial year can be repatriated from the NRO account. This gives flexibility to move funds when needed. Thus, for NRIs, an NRO account is one destination where they can manage their Indian earned money and also remit the money.