Operational Aspects of NRI Business covers the specific rules, procedures, and types of bank accounts designed to meet the banking needs of Non-Resident Indians (NRIs) and Persons of Indian Origin (PIOs).

An NRI is an Indian citizen who resides in a foreign country for employment, business, or any other purpose indicating an indefinite period of stay abroad.

Types of NRI Bank Accounts

The three main types of accounts that NRIs can open in India are NRE, NRO, and FCNR(B) accounts. Understanding their differences is key to managing NRI business.

1. Non-Resident External (NRE) Account

Purpose: To park foreign earnings in India.
Money is deposited into this account in a foreign currency, which is then converted into Indian Rupees (INR).
Key Feature: It is fully repatriable, meaning both the principal and the interest earned can be freely transferred back to the NRI’s country of residence.

2. Non-Resident Ordinary (NRO) Account

Purpose: To manage income earned in India.
This account is used to deposit income earned within India, such as rent from property, dividends from Indian investments, or a pension.
Key Feature: It is not fully repatriable. While the interest earned is repatriable, the principal amount can only be repatriated up to a limit of USD 1 million per financial year.

3. Foreign Currency Non-Resident (Bank) – FCNR(B) Account

Purpose: To hold money in a foreign currency to avoid exchange rate risk.
This is a term deposit (like a Fixed Deposit) that is maintained in a designated foreign currency (like USD, EUR, GBP, JPY, etc.).
Key Feature: Both the principal and the interest are paid in the same foreign currency, so there is no risk of the Indian Rupee’s value fluctuating.

Comparison of NRI Accounts

Feature	NRE Account	NRO Account	FCNR(B) Account
Account Currency	Indian Rupees (INR)	Indian Rupees (INR)	Foreign Currency (e.g., USD, GBP)
Source of Funds	Only foreign earnings	Both foreign and Indian earnings	Only foreign earnings
Repatriability	Fully Repatriable	Restricted Repatriability	Fully Repatriable
Tax Treatment	Interest earned is tax-free in India.	Interest earned is taxable in India.	Interest earned is tax-free in India.
Account Type	Savings, Current, FD, RD	Savings, Current, FD, RD	Only Term Deposit (FD)
Joint Holding	Can be held jointly with another NRI.	Can be held jointly with another NRI or a resident Indian.	Can be held jointly with another NRI.

These specialized accounts allow NRIs to conveniently manage their finances in India, whether it’s their foreign savings or their local income, all while complying with the regulations set by the RBI and FEMA.