By Planning to return to India for good? Concerned about what will happen to your NRI bank account? Read this post to know what happens to an NRI bank account when the account holder returns to India permanently.
To make banking and investing easier for the NRIs (Non-Resident Indians), banks in India now offer different types of bank accounts. From savings accounts, current accounts, to Fixed Deposits (FDs) and Recurring Deposits (RDs), NRIs now have a plethora of options to choose from.
But you are only eligible to open and maintain these bank accounts as long as you retain your NRI status. What if you have an NRI bank account and want to return to India permanently? Will you be able to use the account in India, or will it be converted to a resident account? Take a look-
Managing NRI Bank Account After Returning to India
What happens to your NRI bank account after returning to India depends on whether you’ve returned to India permanently or not. In case if you have returned for good, your NRI bank account will be converted into an equivalent resident bank account. For instance, if you have an NRO (Non-Resident Ordinary) savings account, it will be converted to a resident savings account.
In case if you have an NRE (Non-Resident External) or FCNR (Foreign Currency Non-Resident) account, it will be converted into an RFC (Resident Foreign Currency) account. If you have an NRE FD, it will remain valid until the maturity you’ve selected for the account.
What is an RFC Account?
As the name suggests, a Resident Foreign Currency or RFC account is a type of bank account that can be maintained in foreign currencies by resident Indians. It can either be a current, savings, or term deposit account.
In case if you have an NRE or FCNR account or you are returning to India permanently or temporarily and have foreign currency, you can consider converting your existing NRE or FCNR account into RFC account or open a new RFC account. Moreover, if you decide to move to a foreign country again, the RFC account can also be easily converted into an NRE or FCNR account.
How to Convert NRI Bank Account into Resident Account?
If you’ve returned to India permanently and want to convert your NRI account into a resident account, you can contact your bank and inform them about the change in your residency. You will be required to fill and submit an “Account Redesignation” form either offline or online.
Once the bank receives this declaration, it will convert your account as per your requirement within 3-4 working days. Also, note that the change in account status has tax implications. For instance, interest earned from an NRE account is tax-free. But once it is converted to a resident account, the interest will be taxable.
Managing NRI Bank Account After Returning to India
If you are planning to return to India permanently, your NRI bank account will be converted into an equivalent resident account. The conversion is a simple process and only requires you to submit a redesignation form to your bank offline or online.
You can always get in touch with your bank to know more about the conversion process and tax implications of your converted resident account.
