NRE vs NRO vs FCNR(B) Accounts
Three accounts, three questions: where the money came from, what currency it sits in, and whether it can leave.
NRE, NRO and FCNR(B) are the three accounts an Indian bank most often opens for a non-resident. They answer three different questions: is the money from abroad or from India, should it be held in rupees or foreign currency, and does the customer want to take it back out freely?
Getting the right account at opening saves trouble later, because moving money between them is either restricted (NRO to NRE) or treated as a premature withdrawal (NRE to FCNR(B)). The table below is the version an AD-branch officer keeps in their head.
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NRE vs NRO vs FCNR(B): Side by Side
Who can open
NRE
NRIs and PIOs
NRO
Any person resident outside India
FCNR(B)
NRIs and PIOs
Currency
NRE
Indian rupees
NRO
Indian rupees
FCNR(B)
Permitted foreign currency
Account forms
NRE
Savings, current, recurring, fixed
NRO
Savings, current, recurring, fixed
FCNR(B)
Term deposit only
Term deposit tenor
NRE
Minimum one year
NRO
As for resident accounts (minimum seven days)
FCNR(B)
One to five years
Source of funds
NRE
Money from abroad, or income that keeps its repatriable character
NRO
Money earned or held in India, plus remittances from abroad
FCNR(B)
Money from abroad, or transfer from NRE/FCNR(B)
Repatriability
NRE
Fully repatriable
NRO
Current income only; balances up to USD 1 million per financial year for NRIs/PIOs
FCNR(B)
Fully repatriable
Exchange risk
NRE
Depositor
NRO
Depositor
FCNR(B)
Bank
Interest taxable in India?
NRE
No
NRO
Yes
FCNR(B)
No, for non-residents (and RNOR individuals)
Joint with resident
NRE
Resident relative, 'former or survivor', operates only as PoA holder
NRO
Residents, 'former or survivor'
FCNR(B)
As for NRE
Loans outside India against deposit
NRE
Permitted
NRO
Not permitted
FCNR(B)
Permitted
On return to India
NRE
Redesignate as resident or move to RFC immediately
NRO
Redesignate as resident
FCNR(B)
May run to maturity at contracted rate
| Feature | NRE | NRO | FCNR(B) |
|---|---|---|---|
| Who can open | NRIs and PIOs | Any person resident outside India | NRIs and PIOs |
| Currency | Indian rupees | Indian rupees | Permitted foreign currency |
| Account forms | Savings, current, recurring, fixed | Savings, current, recurring, fixed | Term deposit only |
| Term deposit tenor | Minimum one year | As for resident accounts (minimum seven days) | One to five years |
| Source of funds | Money from abroad, or income that keeps its repatriable character | Money earned or held in India, plus remittances from abroad | Money from abroad, or transfer from NRE/FCNR(B) |
| Repatriability | Fully repatriable | Current income only; balances up to USD 1 million per financial year for NRIs/PIOs | Fully repatriable |
| Exchange risk | Depositor | Depositor | Bank |
| Interest taxable in India? | No | Yes | No, for non-residents (and RNOR individuals) |
| Joint with resident | Resident relative, 'former or survivor', operates only as PoA holder | Residents, 'former or survivor' | As for NRE |
| Loans outside India against deposit | Permitted | Not permitted | Permitted |
| On return to India | Redesignate as resident or move to RFC immediately | Redesignate as resident | May run to maturity at contracted rate |
Which Account Fits Which Customer
- check_circleAn NRI sending salary home to invest in India and wanting the option to take it back: NRE.
- check_circleThe same NRI who also collects rent on a flat in Pune: NRO for the rent, because local income belongs there, even if part of it can later move to NRE after tax.
- check_circleAn NRI who wants to hold dollars in India without carrying rupee risk: FCNR(B).
- check_circleA foreign national of non-Indian origin working on a short assignment or visiting as a tourist: NRO, since NRE and FCNR(B) are only for NRIs and PIOs.
Comparison MCQs on all three accounts. No signup.
Moving Money Between the Three
NRE and FCNR(B) are freely interchangeable as accounts, because both hold repatriable money: transfers between them are permitted credits and debits. A term deposit broken early to make that switch is still a premature withdrawal and attracts the bank's penalty.
NRO to NRE is the restricted direction. It is allowed only within the USD 1 million per financial year facility under the Remittance of Assets Regulations, after tax. The practical rule: once money is in NRO, it takes on NRO's limits, so do not route repatriable funds through NRO without a reason.
How CCFE Tests This
Comparison MCQs usually flip one attribute: 'Which account bears no exchange risk for the depositor?' (FCNR(B)), 'Which can a foreign national open?' (NRO), 'Interest on which account is taxable?' (NRO). The trap is treating NRE and FCNR(B) as identical: they share credit, debit, loan and PoA rules, but differ on currency, account forms and who carries the exchange risk.
FAQs
What is the difference between NRE and NRO accounts?expand_more
NRE holds money from abroad, is fully repatriable and earns tax-free interest. NRO holds money earned or held in India, is repatriable only for current income and up to USD 1 million a financial year for NRIs and PIOs, and its interest is taxable.
Which is better, NRE or FCNR(B)?expand_more
They suit different goals. NRE is in rupees and offers savings and current forms, but the depositor bears exchange risk. FCNR(B) is a foreign-currency term deposit of one to five years where the bank bears exchange risk.
Can a foreign citizen open an NRE or FCNR(B) account?expand_more
Only if they are a Person of Indian Origin, which includes OCI cardholders. Other foreign nationals can open an NRO account.
Can I convert an NRE deposit into an FCNR(B) deposit?expand_more
Yes, transfers between NRE and FCNR(B) are permitted. If a term deposit is broken before maturity to do it, the bank's premature-withdrawal penalty applies.
Next steps
- NRE Accountarrow_forward
- NRO Accountarrow_forward
- FCNR(B) Depositsarrow_forward
- FEMA & Trade Finance Conceptsarrow_forward
100 questions across all six modules, timed and scored.