NRE, NRO and FCNR Accounts: Your Indian Bank Accounts When You Move Abroad (2026)
Key takeaways
- Under FEMA, a resident savings account cannot continue once you are a non-resident — it must be redesignated as NRO (or the balance moved to NRE), not simply left as it was.
- NRE = repatriable rupee account for foreign earnings; principal and interest fully transferable abroad; interest is exempt from Indian income tax while you are a FEMA non-resident.
- NRO = rupee account for income arising in India; interest and other income are taxable in India, with tax deducted at source; repatriation is capped at USD 1 million per financial year across all your NRO accounts.
- FCNR(B) = foreign-currency term deposit (1 to 5 years) that removes rupee exchange-rate risk; interest is tax-free in India and fully repatriable.
- The USD 250,000 Liberalised Remittance Scheme (LRS) limit is for residents. As an NRI you no longer use LRS; you use NRE/FCNR (unlimited) and NRO (USD 1m cap) instead.
- Inform your bank promptly when you move — continuing to run a resident account after you become an NRI is a FEMA contravention.
What changes the moment you become “resident outside India”
Your banking status is governed not by the Income-tax Act but by the Foreign Exchange Management Act, 1999 (FEMA). FEMA’s residency test is about intention and purpose of stay, not a fixed day count: broadly, if you leave India to take up employment, business or any purpose indicating an intention to stay abroad indefinitely, you become a “person resident outside India” — an NRI — usually from the date of departure. This is a different and often earlier trigger than the income-tax 182-day count. The Reserve Bank of India’s (RBI) Master Direction – Deposits and Accounts and its FAQs on accounts in India by non-residents set out the account framework that follows.
Once your status changes, three things must happen. First, your existing resident savings and current accounts must be redesignated as NRO accounts (your bank can do this without you closing and reopening). Second, resident fixed deposits are typically continued to maturity and then converted. Third, you must review other resident-only products — for example, you cannot make fresh contributions to a Public Provident Fund (PPF) account opened as a resident beyond its original tenure, and resident demat accounts must be re-papered on a non-repatriable (NRO) or repatriable (NRE) basis. Leaving a resident account running as though nothing changed is a technical breach of FEMA, so notify your bank in writing as soon as you have moved.
The NRE account: your repatriable rupee account for foreign earnings
A Non-Resident External (NRE) account is a rupee account into which you deposit income earned outside India — your foreign salary, remitted in and converted to rupees. Its defining features are repatriability and tax treatment. Both the principal and the interest can be sent back abroad freely, with no monetary ceiling, because the money originated abroad. Interest earned on an NRE account is exempt from Indian income tax for as long as you remain a person resident outside India under FEMA — the exemption flows from Section 10(4)(ii) of the Income-tax Act, read with your non-resident status, so the bank deducts no TDS.
NRE accounts can be savings, current, recurring or fixed deposits, and can be held jointly with another NRI, or with a resident close relative on a “former or survivor” basis. The trade-off is currency risk: because the balance is in rupees, a falling rupee erodes the value of your savings measured in your foreign currency. Use NRE for money you may want to bring back out of India, and for building rupee savings you are comfortable holding in local currency.
The NRO account: for income that arises in India
A Non-Resident Ordinary (NRO) account is where income that arises in India is collected after you emigrate — rent from an Indian property, dividends, interest, a pension, or the proceeds of selling Indian assets. This is the account your old resident savings account becomes. Unlike NRE, interest on an NRO account is taxable in India, and the bank deducts tax at source (TDS) on that interest — for non-residents the NRO TDS rate is materially higher than the resident rate unless reduced by a tax treaty (see below).
Repatriation from an NRO account is permitted but capped. Under RBI rules an NRI may remit up to USD 1 million per financial year (1 April to 31 March), aggregated across all NRO accounts, covering both the balance and current income, after payment of applicable taxes. To do this your bank requires two forms filed on the income-tax portal: Form 15CB, a certificate from a chartered accountant confirming the remittance and that tax has been dealt with, and Form 15CA, your own declaration. These forms are described on the income-tax e-filing portal. Current income (rent, pension, dividends) net of tax is repatriable without counting against the cap; the USD 1 million ceiling mainly governs capital — sale proceeds and accumulated balances.
FCNR(B): holding foreign currency and dodging rupee risk
A Foreign Currency Non-Resident (Bank) — FCNR(B) — account is a term deposit held in a permitted foreign currency (US dollars, pounds sterling, euros, and others), not in rupees. Because you deposit and are repaid in the same foreign currency, you carry no rupee exchange-rate risk on the deposit. Tenures run from a minimum of one year to a maximum of five years, per RBI’s Master Direction. Interest on an FCNR(B) deposit is exempt from Indian income tax while you are a non-resident (Section 10(15)(iv)(fa) of the Income-tax Act), and both principal and interest are fully repatriable. FCNR(B) is the natural home for foreign savings you want to keep in hard currency while still earning Indian bank interest — a useful hedge if you are unsure whether you will settle abroad permanently.
NRE vs NRO vs FCNR(B) at a glance
Source of funds: NRE and FCNR(B) are for money earned abroad; NRO is for income arising in India. Currency: NRE and NRO are in rupees; FCNR(B) is in foreign currency. Tax on interest: NRE and FCNR(B) interest is tax-free in India; NRO interest is taxable with TDS. Repatriation: NRE and FCNR(B) are freely repatriable; NRO is capped at USD 1m per financial year with Forms 15CA/15CB. Many NRIs run all three: NRE for repatriable rupee savings, NRO to receive Indian rent or pension, and FCNR(B) to shelter part of their savings from rupee depreciation.
A note on LRS — and why it stops applying to you
While you were resident, the Liberalised Remittance Scheme (LRS) let you send up to USD 250,000 per financial year abroad for travel, education, investment and maintenance of relatives, as set out in RBI’s Master Direction on the LRS. LRS is available only to resident individuals. Once you are an NRI you no longer use LRS at all: your repatriable NRE and FCNR(B) funds move abroad without any LRS-style cap, and your Indian-source money leaves via the NRO USD 1 million route. It is a common misconception that NRIs are limited to USD 250,000 — that figure belongs to your former resident status.
How Flyto can help
Flyto Relocation moves households from India to Europe and worldwide, door-to-door, handling packing, export documentation, sea or air freight, customs and delivery at destination. Sorting your NRE/NRO/FCNR banking is one part of a clean exit from India; getting your belongings there safely is another. Get a quote.
Frequently asked questions
Do I have to close my Indian savings account when I move abroad?
No — you must not simply keep running it as a resident account, but you don’t close it either. Your bank redesignates it as an NRO account, so the same account continues in a compliant form. See RBI’s FAQs on non-resident accounts.
Is interest on my NRE account really tax-free in India?
Yes, while you remain a person resident outside India under FEMA. The exemption comes from Section 10(4)(ii) of the Income-tax Act, so the bank deducts no TDS on NRE interest. See the income-tax portal.
How much can I send abroad from my NRO account?
Up to USD 1 million per financial year (1 April–31 March), aggregated across all your NRO accounts, after taxes, using Forms 15CA and 15CB. This is an RBI limit; larger amounts need RBI approval. See the RBI Master Direction – Deposits and Accounts.
Can I still use the USD 250,000 LRS limit as an NRI?
No. LRS is for resident individuals only. As an NRI you repatriate through NRE/FCNR (no cap) and NRO (USD 1m cap). See the RBI LRS Master Direction.
What is the advantage of FCNR(B) over NRE?
FCNR(B) holds your money in foreign currency, so you avoid rupee depreciation risk, whereas NRE balances are in rupees. Both are tax-free and repatriable. FCNR(B) is a term deposit of 1 to 5 years. See the RBI Master Direction – Deposits and Accounts.
Can I hold an NRE or NRO account jointly with a resident?
Yes. NRE/NRO accounts can be held jointly with a resident close relative on a “former or survivor” basis, and with other NRIs on either-or-survivor terms, subject to RBI conditions. See the RBI FAQs.
Sources
- Reserve Bank of India — Master Direction, Deposits and Accounts (NRE/NRO/FCNR(B))
- Reserve Bank of India — FAQs, Accounts in India by Non-residents
- Reserve Bank of India — Master Direction, Liberalised Remittance Scheme
- Reserve Bank of India — Foreign Exchange Management Act (FEMA) notifications and regulations
- Income Tax Department — e-Filing portal (Forms 15CA/15CB, tax exemptions)
- Income Tax Department — Income-tax Act (Section 10(4) and 10(15) exemptions)
- Reserve Bank of India — FEMA (Deposit) Regulations, 2016
- Government of India — Foreign Exchange Management Act resources