Many Indians in the UAE want an account back home in India. An NRE account gives them a bank account in India for foreign earnings. This guide explains how the account works under the official Indian rules.
Bolo Asan read the official rule book before writing this guide. We use only the rules that the Reserve Bank of India prints. You will find no bank offers and no personal advice here. The guide follows the same order as the rule book itself.
The guide uses the UAE as the home base example. Readers in Dubai, Abu Dhabi and Sharjah can follow the same steps. The same rule book serves Indians in every other country too.
What the Name NRE Means
The short name NRE stands for Non-Resident External. The full scheme name is the Non-Resident External Rupee Account Scheme. The word rupee tells you the account holds Indian rupees. The word external points to money links outside India.
An NRE account sits with a bank inside India. You hold it while you live and work outside India. Most money enters it from outside India through banking channels.
Who Counts as an NRI
An NRI is a person resident outside India who holds Indian citizenship. Resident here means the country where a person normally lives. The test joins two facts about one person.
Place of living gives the first fact for the test. Citizenship of India gives the second fact for it.
A worker in Dubai with an Indian passport fits this meaning. A student in Canada with Indian citizenship also fits it. Your job or city does not change the basic test.
Who Counts as a Person of Indian Origin
The rules also name a second group for this account. A Person of Indian Origin lives outside India. This person holds citizenship of another country. The bar names Bangladesh and Pakistan and any country the Central Government adds.
The person must also meet one of four conditions in the book.
- Citizen of India earlier under the Constitution or the Citizenship Act of 1955
- Belonged to a territory that became part of India after 15 August 1947
- Child or grandchild or great grandchild of a citizen of India
- Spouse of foreign origin of a citizen of India
These family lines also run through people from the first two lines. People with an OCI card also count in this group. The Citizenship Act names this card in its Section 7(A). Both NRIs and PIOs can open and hold these accounts.
The Law Behind This Account
One law book carries all the rules for this account. Its name is the Foreign Exchange Management (Deposit) Regulations, 2016. The Reserve Bank of India issued this book in April 2016. Later changes updated the text up to November 2019. The notification number on the book reads FEMA 5(R)/2016-RB.
The Reserve Bank made this book under the Foreign Exchange Management Act. The book governs deposits between residents and people outside India. It replaced an older notification from May 2000.
Schedule 1 of the book carries the full NRE scheme. Regulation 5 gives banks the power to run this scheme. The word deposit covers money placed with a bank or other body. The Enforcement Directorate website carries the full official text of these regulations.
Three Schemes Sit Side by Side
Regulation 5 names three deposit schemes for people outside India. The first scheme is the NRE scheme in Schedule 1. The second scheme is the FCNR(B) scheme in Schedule 2. The third scheme is the NRO scheme in Schedule 3.
FCNR(B) means Foreign Currency Non-Resident Bank account. The FCNR(B) name itself shows foreign currency deposits. The short name NRO means Non-Resident Ordinary. NRO accounts serve any person who lives outside India.
Authorised dealer means a dealer with Reserve Bank permission for foreign exchange. An authorised dealer in India can accept deposits under all three. Authorised banks can also accept NRE and NRO deposits.
This guide covers only the first scheme in full detail. The other two names appear only so you can tell them apart. Each scheme has its own schedule in the same book.
One more name sits later in the same regulation. SNRR means Special Non-Resident Rupee account. This guide leaves that account aside as well.
Banks That Can Open the Account
Only banks with the right permission can offer this account. Authorised dealers can open and hold these accounts for you. Banks with Reserve Bank permission can do the same work. Permission from the Reserve Bank sits behind every offer.
The book gives authorised bank one exact meaning. It means a bank with Reserve Bank permission for these outside India accounts. The meaning expressly includes a cooperative bank with that permission.
Your UAE bank only sends money into the account. The Indian bank keeps the account under the scheme rules.
Four Forms of the Account
The rules let you hold the account in any form at all. The bank keeps the same scheme rules for every form. The four forms in the book are these. The words any form keep the door open beyond these four.
- Savings account
- Current account
- Recurring deposit account
- Fixed deposit account
A fixed deposit locks money in for a set time. A recurring deposit takes a fixed sum again and again. The bank opens the account in the form you choose. The interest and tax rules stay the same across forms.
Steps To Open One From the UAE
The rule book sets the frame for opening the account. Each bank runs its own forms inside that frame. Bolo Asan lists the steps in the order they normally happen.
- Check that you fit the NRI or PIO meaning above.
- Choose an authorised dealer or a bank with Reserve Bank permission.
- Tell the bank which account form you want.
- Apply to the bank in your own name from the UAE.
- Send the first money from the UAE through banking channels.
- Ask the bank about the nomination facility for the account.
- Read the credit and debit lists before you send money.
The bank then opens the account under the NRE scheme. You run the account from the UAE after that day.
The rule book does not print one single application form. It also prints no list of identity papers. Each bank asks for its own papers under its own checks. You can ask your chosen bank about its NRE account opening online route.
Money That Can Enter the Account
The rules call money coming in a credit. Permitted currency means a foreign currency that people can freely convert. Schedule 1 lists every credit that an NRE account can take. Bolo Asan follows that official list closely below.
- Money that you send to India in any permitted currency.
- Personal cheques and travellers cheques that you deposit in person during a temporary visit.
- Foreign currency notes that you hand over during a temporary visit.
- Transfers from other NRE or FCNR(B) accounts.
- Interest that grows on the money inside the account.
- Income from India that belongs to you after tax payment.
- Money back from investments first paid from this account or from remittances.
- Any other credit that the Reserve Bank allows.
The bank checks each credit against this list before accepting it. Money outside this list cannot enter the account. This money back line covers both maturity money and sale money.
Cheques and Cash During a Visit
Some credits enter only when the holder visits India. A personal cheque on a foreign currency account works this way. Travellers cheques and bank drafts work the same way.
The holder deposits these items in person during the visit. The bank first checks that the holder still lives outside India.
Travellers cheques must carry an issue place outside India. The items must stand endorsed in the name of the holder. An endorsement writes the holder name on the item.
Foreign currency notes follow a twin path during a visit. The holder tenders the notes in person to the bank. A Currency Declaration Form covers the amount where rules apply. The dealer also confirms the outside India status for these notes.
Money That Can Leave the Account
The rules call money going out a debit. Schedule 1 lists the debits that the account allows.
- Payments for your local costs inside India.
- Money that you send outside India.
- Transfers to NRE or FCNR(B) accounts of eligible people.
- Buying shares or property in India under the rules.
- Any other payment that the Reserve Bank allows.
Share and property buying must follow the rules for those deals. A property purchase also needs cover under the property rules. The investment line covers shares, securities and commercial paper of Indian companies. Each payment out must match one line on this list.
Sending Money Back to the UAE
People call this sending back work repatriation. Repatriation means moving your money back to the country where you live. The debit list allows remittances outside India from this account. The rule book prints no amount cap on these remittances.
Your money lands in your UAE bank account after each transfer. The bank sends the money through normal banking channels. Our guide on UAE bank account opening requirements covers the UAE side of banking.
The rules place this freedom inside the debit list itself. Bolo Asan stresses one point about this freedom. The freedom comes from the rules and not from any bank offer.
How Interest Works Here
The account earns interest on the money inside it. The rule book fixes no interest rate in its pages.
It says the Reserve Bank issues directions on rates from time to time. Banks revise rates when fresh Reserve Bank directions arrive. The directions reach banks as instructions from the Reserve Bank.
Each bank sets its rate under those Reserve Bank directions. The holder sees the current rate only at the bank. Ask your bank for its current rate before you open the account. Bolo Asan prints no rate here because the book prints none.
Tax on the Interest
Schedule 1 also prints the tax treatment of this interest. Interest income on an NRE account balance stays exempt from income tax.
This line sits in the miscellaneous part of Schedule 1.
The rule sits inside the NRE schedule itself. You can check the line in the official regulation text on the Enforcement Directorate website.
Income From India Follows Another Rule
Some account holders also earn income inside India. Current income means income of the present time in India. The credit list allows that income into the account. The same line adds one clear condition for it.
The holder pays the applicable taxes in India first. Only then does the income enter as a credit. This tax step separates India income from foreign remittances. Foreign salary never passes through this India tax step.
Holding the Account With Family
Two or more NRIs can hold one NRE account together. Two or more PIOs can also hold one together. Two holders can also mix one NRI with one PIO.
People call this way of holding a joint account. Each joint holder shares one single account balance.
A holder can also add a resident relative as joint holder. Resident relative means a close family member who lives in India. The Companies Act of 2013 carries this family list. Its Section 2(77) list names parents, children, spouses and siblings.
This joint holding works on former or survivor terms only. Former or survivor means the non-resident holder stays the main holder during life.
A power of attorney lets one person act for another person in bank work. The resident relative can run the account under this power while the holder lives abroad.
Adding a Nominee
A nominee is the person you name for the money after death. Regulation 8 gives this nomination facility to individual account holders. Authorised dealers can provide the facility on these accounts. The facility covers deposits and accounts under these regulations.
You name the nominee with the bank that holds your account. A nominee differs from a joint holder in one way. A joint holder shares the account during your lifetime.
What a Power of Attorney Holder Can Do
Many holders give a power of attorney to family in India. The rules allow this help but set tight limits. The two allowed uses come first in this section.
- Local payments inside India for the account holder.
- Remittance of funds to the account holder himself through banking channels.
The same rules block three other moves by this holder.
- Sending money abroad to any other person.
- Giving the money as a gift to a resident.
- Moving the money into another NRE account.
The account holder keeps full control from outside India. Family help stays possible inside these clear lines.
Loans Against the Balance
The rules let banks lend against money in an NRE account. The security for the loan is the deposit itself. An authorised dealer or bank can lend to the holder in India.
The holder can use such a loan for these purposes.
- Personal needs or business needs in India.
- Direct investment in India on a non-repatriation basis.
- Buying a flat or house in India for his own stay.
Non-repatriation basis means the invested money stays inside India. The loan cannot fund lending the money onward to others. It cannot fund farming or plantation activity either. It also cannot fund a real estate business.
The holder repays the loan in three allowed ways.
- The bank adjusts the loan against the deposit itself.
- Fresh money comes in from abroad through banking channels.
- Local rupee funds come from an NRO account of the holder.
Banks can also lend to a third person in India. The third person must live in India as a resident. The loan then stands against the fixed deposit as security. A bank branch abroad can also lend to the holder outside India against the deposit.
If You Move Back to India
Life plans change and some holders return to India. The rules answer this change for every NRE account. A returning holder must change the account at once.
The bank re-designates the account as a resident account. Or the holder moves the funds into an RFC account. RFC means Resident Foreign Currency account for returning Indians. The holder picks one of these two paths on return.
RFC accounts hold foreign currency for people back in India. Only a holder who fits the RFC rules can use that route. Banks act on this change right after the return.
The change kicks in when the holder returns to stay. An uncertain period means the holder has no fixed return date.
Mix-Ups Readers Bring to Us
Some readers think the account holds UAE dirhams. The scheme name itself says the account holds rupees.
Some readers think a nominee can use the money today. A nominee role starts only after the holder dies.
Some readers think any person can deposit cash notes for them. The notes line needs the holder in person during a temporary visit.
Questions People Ask Bolo Asan
Readers send Bolo Asan many questions about this account. Each answer below follows the same official rule book.
Can I open an NRE account from overseas?
Yes, the scheme works for people who live outside India. You open the account yourself in your own name. A power of attorney holder in India cannot open it for you.
Does the rule book print a minimum balance amount?
No, the schedule prints no minimum balance figure at all. It names forms, credits, debits, loans and tax lines instead.
Can I open the account during a short trip to India?
Yes, the rules allow opening during a temporary visit. You pay with foreign currency travellers cheques, notes or coins. The bank takes these items from you during that visit.
What happens to the money if the holder dies?
The bank may send the funds to the nominee. This remittance works when the nominee lives outside India. A nominee who lives in India follows a Reserve Bank application route.
Do these accounts get a special cheque book?
Yes, banks may issue special series cheque books for them. Ask your bank for this series when you open the account.
Can the account go below zero for a short time?
A savings account under this scheme allows a small overdraft. The limit stands at Rs.50,000 under the rules. The holder must clear it within two weeks.
Can a refund from a share purchase enter this account?
Yes, refunds of share or debenture money can enter as credit. The refund comes net of any income tax payable on it. This line covers cases where shares never came to the holder.
Does a short visit to India change the account status?
No, the account may continue as an NRE account during short visits. A short visit means a brief trip with a return plan abroad.
Do banks report these accounts to anyone?
Yes, the rule book asks banks to report these accounts. Authorised dealers and banks send reports to the Reserve Bank. This reporting keeps the scheme under official watch.
How the Rule Book Is Built
The book opens with a short title and a start line. Regulation 2 then sets the meanings of the hard words. Regulation 3 restricts deposits between residents and people outside India. Regulation 5 then names the schemes for people outside India.
The schedules at the back carry the deep rules. Schedule 1 holds the full NRE scheme in nine parts. Readers can jump straight to Schedule 1 for this account.
Official Sources Bolo Asan Used
Bolo Asan built this guide on one official law book. The Enforcement Directorate website hosts that book for the public. The book runs to twenty-eight pages in this official copy.
Read the Foreign Exchange Management Deposit Regulations 2016 full text for every rule above. The Enforcement Directorate page for these laws lists this book at number 32.
FEMA means the Foreign Exchange Management Act of India. Banks and readers both follow this one book for the scheme.
This guide shares general information on how the account works. It gives no financial advice and no bank recommendation. Bolo Asan asks readers to confirm details with their bank. Rules can change after the date on this page.
Bank staff can explain the current bank process and papers. They can also share the present rate for each form.
Last Updated: October 20, 2026
