Can you convert Savings Account to NRE Account?

 

It is an account issued by the banks to the persons resident in India with the purpose of saving money and executing everyday transactions.

NRE Account:

Why Conversion Is Not Possible?

To bring forex to the country, the regulator permitted NRI customers to bring foreign earning (FCY) to India and earn interest income instead of keeping funds in overseas. Further, there is no restriction on repatriation such funds received in the NRE account.  The earning from India is not freely repatriable, hence resident account cannot be converted into NRE account.

Options Available to NRIs:

If your status has changed to NRI, there are two basic options for you:

1. Open a New NRE Account:

For this, the required documents need to be submitted to prove your NRI status. Your existing savings account continues as it is.

2. Convert to an NRO Account:

If you have both Indian and foreign sources of income, conversion of your  savings bank account to a Non-Resident Ordinary, or NRO, account may be appropriate. However, repatriation from an NRO account has some limitations.
NRE Savings Account Made Easy

The NRE savings account is a financial product that is specially designed to help NRIs manage their overseas income effectively. Some of its important features are:

• Tax Exemption:

  The principal amount as well as the interest on it is free from taxes in India.

• Seamless Repatriation

  You can transfer funds back home to your country of residence as and when you want to.

• Interest Earning:

  Your money grows over some time as interest accrues.

• Investment Avenue

  Many banks provide linked investment options.

• Internet Banking:

  The account is conveniently managed over the internet.

• Other Benefits:

  Some banks also offer debit cards, chequebooks, etc.

• Joint Accounts

  You can jointly open an NRE account with your spouse or eligible co-holders.

[Also Read: Types and Benefits of NRI Savings Account]

Conclusion

Although one cannot convert an existing savings account into an NRE account, opening a new NRE account will make sense for NRIs looking to manage their foreign earnings properly. With its tax benefits, repatriation ease, and other special features, an NRE savings account helps your financial planning run smoothly. However, interest rates on NRE savings accounts could vary between banks. One should compare the interest rates before opening such an account.