Can NRIs Hold Multiple NRE Accounts?

The short answer to this question is yes. An NRI can hold multiple NRE accounts in India simultaneously in different or even within the same bank. It offers various financial benefits but also comes with several responsibilities that you must adhere to.

There are no restrictions on the number of NRE accounts you can open or the number of transfers you can make. You can also open joint NRE accounts with another NRI or even an Indian resident, but only on a former or survivor basis. Staying aware of this information is important for someone who manages salaries, investments, and savings across borders.

In this blog, we will cover everything you need to know about holding multiple NRE accounts as an NRI.

What is an NRE Account and Its Features?

A Non-Resident External (NRE) account is a rupee-denominated bank account used by NRIs to park their foreign earnings in India. It is one of the primary banking options available to Indian citizens and OCIs living abroad.

Key Features of an NRE Account

An NRE account has several beneficial features, which are as follows:

• The funds are deposited in foreign currency and automatically converted to Indian rupees by the bank.
• You can freely repatriate both the principal and interest amount abroad without any restrictions.
• Interest earned from an NRE account remains completely exempt from tax in India
• The account can be held either as a savings account or as a fixed deposit.
• The account can be held jointly, but only with another NRI and not with an Indian resident. However, in some cases, it can be held with a resident Indian on a former or a survivor basis.

These features, especially the tax-free interest and fully reparability makes NRE accounts a better choice for NRIs. Particularly those who wish to maintain liquidity in India while also having the flexibility to move funds back abroad (when required).

Now comes the main question: Can an NRI hold multiple NRE accounts in India? Let's find out.

Can NRIs Hold Multiple NRE Accounts in India?

As discussed earlier, yes, NRIs can hold multiple NRE accounts in India at the same time across different banks or even within the same bank.

Under FEMA (Foreign Exchange Management Act) or RBI (Reserve Bank of India) regulations, no restriction limits an NRI to a single NRE account. You are allowed to open NRE savings accounts, NRE fixed deposits, or both in as many banks as you want. However, each account must be opened and maintained in compliance with the applicable regulations.

Mostly, NRIs choose to hold NRE accounts at two or three different banks to spread risk, enjoy better interest rates, or maintain separate accounts for different financial purposes. However, that being said, holding multiple accounts also comes with some responsibilities.

You must ensure to maintain each account properly, have your correct residential status on record, and report each account in your AIS and income tax records (if applicable).

Now, to ensure compliance, we will talk about the multiple NRE account holding rules for NRIs.

Rules for NRIs Holding Multiple NRE Accounts

Although there's no limit on the number of NRE accounts you can hold, you must adhere to several rules that govern how these accounts must be operated:

Eligibility Criteria Remains Same Across All Accounts

Every NRE account you hold is subject to the same regulatory eligibility requirements. It means you must be an NRI under FEMA while opening the account and throughout the period you hold the account.

Once you return to India permanently and your residential status changes to resident, you must re-designate all your NRE accounts. Not just one, each NRE account you hold must either be converted or closed. You can typically convert each account to resident savings accounts or RFC (Resident Foreign Currency) accounts.

Source of Funds Must be Foreign Earnings

NRE accounts are designed to hold foreign income. It can include salary earned abroad, rental income received from foreign property, or funds legally earned and held outside India.

You cannot deposit your Indian rupee income into an NRE account, like rental income from an Indian property or Indian salary. Deposit your Indian rupee income into an NRO (Non-Resident Ordinary) account.

Each Account is Subject to RBI and FEMA Regulations Independently

Keep in mind that opening multiple NRE accounts does not trigger combined compliance or reporting requirements. It means the requirements for each account are regulated strictly by the respective bank holding it.

However, rules related to your overall NRI status and the source of funds apply equally across all accounts.

Update Your KYC and Residential Status at Each Bank

You must provide your current KYC documentation to each bank where you hold an NRE account. It can include proof of overseas address and NRI status.

Additionally, if there is any change in your contact details, address abroad, or residential status, you must update this at every bank you hold an account with.

Joint Account Rules Apply Equally

You can hold a joint NRE account, but the co-holder must also be an NRI. You are not allowed to hold a joint NRE account with a resident Indian under standard EBI guidelines. However, specific former or survivor basis are an exception.

Reporting Interest

Although NRE interest is exempt from taxation in India, it may be taxed in your country of residence. For example, NRE interest is fully taxable in the US as ordinary income on your federal return.

If you hold multiple NRE accounts, you must report interest from all of these accounts in your overseas tax return.

These were the rules that you must keep in mind and comply with while holding multiple NRE accounts. Moving further, we will discuss the advantages of holding multiple NRE accounts.

Benefits of Holding Multiple NRE Accounts

Here are some benefits to help you understand why NRIs hold multiple NRE accounts:

Better Interest Rates Across Banks

Different banks may offer different NRE FD interest rates, which can vary beneficially, mainly for longer tenures. To get access to the best available rates at any given time, many NRIs choose to split their NRE FD across two or more banks, without being tied to a single institution's rate structure.

Diversifying Risk

The DICGC (Deposit Insurance and Credit Guarantee Corporation) scheme secures up to ₹5 lakhs per person, per bank. To protect larger funds, Non-Resident Indians (NRIs) divide their savings across various banks. This ensures a larger portion of their NRE account balances remains protected against potential bank failures.

Separating Funds By Purpose

Some NRIs use different NRE accounts for different financial goals. It means they use one account for regular family remittances, another one for long-term FD investments, and one to manage Indian-property-related expenses. Keeping separate accounts makes it easier to track and report everything clearly.

Relationship Banking Benefits: Maintaining NRE accounts at multiple banks, especially private sector banks, offers various relationship benefits. These benefits are specifically tailored for NRIs. It includes priority banking services, dedicated relationship managers, and preferred fixed deposit (FD) rates for high-value clients.

To enjoy these benefits, many NRIs who qualify for premium banking services at multiple banks often keep accounts at each.

Operational Continuity: The banking system can experience downtimes, account freezes, or service delays occasionally. NRIs who rely on Indian accounts to make timely payments tend to maintain a second NRE account. This helps to have a backup to ensure continuity in their transactions.

These were the few benefits of holding multiple NRE accounts. Now, the next question is whether funds can be transferred between multiple NRE accounts. Let's discuss that.

Can Funds Be Transferred Between Multiple NRE Accounts?

Yes, you can freely transfer funds between NRE accounts held by the same NRI across different banks. According to the Reserve Bank of India (RBI) regulations, transfers between NRE accounts are categorized as repatriable transactions. It means the funds retain their foreign origin even after moving from one NRE account to another.

There are no limits on the number of transfers or amounts, as long as both accounts are owned by the same individual.

Now that we know we can transfer funds between multiple NRE accounts. Let's understand how to do the same.

How To Transfer Funds Between NRE Accounts?

You can transfer funds between NRE accounts by:

• Using NEFT, RTGS, or IMPS via net banking. Most banks support these services for NRE to NRE transfers.
• Alternatively, you can request a fund transfer through your bank's NRI service desk.
• Transfers between NRE accounts at different banks are processed via standard Indian payment infrastructure.

*Important: While transferring funds from an NRE account to a Non-Resident Ordinary (NRO) account is allowed, the funds transferred to an NRO account lose their free repatriation status. NRE account funds have limits on repatriation. Currently, the limit is up to 1 million USD per financial year after tax compliance. So, although you can move money from NRE to NRE account whenever needed, you must think carefully before doing that

If you are still confused about something, let's take the help of an example to understand everything easily.

Moving further, let's look at some of the common mistakes to avoid by NRIs holding multiple NRE accounts.

Common Mistakes NRIs Should Avoid

Here are some of the common mistakes that NRIs must avoid if they hold multiple NRE accounts to ensure compliance:

Failing to Update Residential Status At All Banks When Returning to India

This is the most significant mistake that NRIs must avoid. Once you return to India permanently and become a resident, you must convert every NRE account that you hold. You must not think that converting the one you use frequently is sufficient.

If you continue to hold an NRE account even after becoming a resident, it will be considered a FEMA rule violation. It will be considered a violation, regardless of how many accounts you have.

Depositing Indian Rupee Income into NRE Accounts

You must deposit any income originated, received, or earned in India into an NRO account. It can include rental income from properties, dividends from Indian sources, or any other income from India. If you mix Indian income into an NRE account, it will risk its foreign-source status.

Not Reporting NRE Accounts on Overseas Tax Returns

Many NRIs mistakenly believe that tax-free interest from NRE accounts in India does not need to be reported abroad. This is misleading for most countries.

For example, in the US, NRE account balances exceeding $10,000 at any point in the year must be reported on FBAR. Additionally, Form 8938 must be filed if relevant thresholds are met. You must report each NRE account separately.

Opening NRE Accounts Jointly with Resident Indians

For convenience, some NRIs include resident Indian family members as joint account holders. This practice violates the guidelines of the RBI (Reserve Bank of India). This is because joint NRE accounts are allowed only with fellow NRIs.

The correct approach is to use a Power of Attorney for a resident family member to operate the NRE account, rather than joint holding.

Losing Track of FD Maturity Dates Across Multiple Accounts

Managing NRE fixed deposits across several banks can lead to missed maturity dates. Most banks automatically renew FDs at the current rate, which might be lower than the original investment rate.

Ensure you set calendar reminders for each FD maturity date. This will help you to make proactive decisions on whether to renew, reinvest at a better rate, or repatriate funds.

Not Updating KYC Details Across All Banks

When your overseas address or contact information changes, ensure you update it with every bank where you hold an NRE account. Inconsistent Know Your Customer (KYC) details can lead to account freezes or compliance-related notifications.

The Bottom Line

Maintaining multiple NRE accounts can be a financially beneficial choice for many NRIs. Some reasons to hold multiple accounts at different banks can be the ability to secure better interest rates, enjoy deposit insurance coverage, and allocate funds purposefully.

The same rules that govern a single NRE account also apply to every NRE account you hold. The eligibility criteria, source of funds limitations, conversion duties when your residency status changes, and overseas reporting obligations remain the same.

If you're thinking of opening more NRE accounts, contact an expert at Savetaxs. At Savetaxs, we have a team of professionals who can ensure you open NRE bank accounts in India from your residential country easily. Our experts will help you find a bank that offers highly competitive interest rates. Contact us right away, as we are working 24/7 across all time zones.