An NRO account is a savings account, but with restrictions on moving money out of India
An NRO account (Non-Resident Ordinary account) is a savings account opened by someone who is not a resident of India. It functions like a regular savings account — you deposit money, earn interest, and can withdraw funds — but the money you put in must come from India. You cannot transfer funds into an NRO account from outside the country.
The key difference from a standard savings account is that NRO accounts are designed for non-residents who have income or assets in India. If you are an Indian citizen living abroad, you can use an NRO account to manage rupees earned in India, such as rental income from property, pension payments, or dividends from Indian investments.
Banks treat NRO accounts as savings accounts in terms of how they work day-to-day — you get a debit card, online access, and interest on your balance. The restrictions come in when you want to move money internationally or repatriate funds back to your home country.
Key Takeaways
- An NRO account is a savings account for non-residents, but only money earned in India can be deposited into it.
- You can withdraw money from an NRO account within India freely, but moving money out of the country has limits and tax rules.
- Interest earned on NRO accounts is taxed in India, and you must report the account to Indian tax authorities.
- If you want to move money freely between countries, an NRE account (Non-Resident External) is a different product with fewer restrictions on international transfers.
How an NRO account works compared to a regular savings account
A regular savings account in India is for residents — people living in the country. An NRO account is the equivalent for non-residents. Both earn interest, both come with a debit card and online banking, and both have monthly transaction limits set by the bank.
The practical difference shows up when money enters or leaves the account. With a regular savings account, you can deposit money from anywhere — your salary, transfers from family, money from abroad. With an NRO account, deposits must come from India. If you receive a salary in India, rental income from an Indian property, or a pension paid in rupees, that can go into an NRO account. Money wired from your bank account in the United States or Europe cannot.
Withdrawals within India work the same way for both. You can use the debit card, write checks, or transfer money to other Indian bank accounts without restriction. The limit appears when you want to send money out of India. NRO accounts allow repatriation, but the amount you can send abroad each financial year is capped, and you must show that the money came from legitimate sources in India.
What you can and cannot do with money in an NRO account
You can withdraw cash from an NRO account at any ATM in India. You can pay bills, transfer money to other Indian accounts, and use the debit card for purchases in India. Interest accrues monthly and is added to your balance. These functions are identical to a regular savings account.
You cannot deposit money into an NRO account from abroad. If you try to wire funds from your overseas bank account, the Indian bank will reject the transfer. You also cannot use an NRO account to receive foreign currency directly — all transactions are in Indian rupees.
Repatriating money (sending it out of India) is possible but regulated. The Reserve Bank of India allows non-residents to send out the interest earned on an NRO account without limit, but the principal amount you can repatriate is capped at $1 million per financial year (April to March). You will need to file a form with your bank and provide proof that the money came from India.
Tax treatment of NRO accounts
Interest earned on an NRO account is taxed as income in India, even though you live abroad. The bank will deduct tax at source (TDS) from the interest before adding it to your account. The rate depends on whether you have filed an Indian tax return and your tax residency status, but it is typically 20 to 30 percent.
You must report the NRO account to the Indian tax authority (the Income Tax Department) if your total income, including interest, exceeds the threshold for filing a return. You also need to disclose the account on your tax return in your country of residence, because most countries tax worldwide income.
This dual tax obligation is one reason some non-residents prefer an NRE account instead — interest on NRE accounts is tax-free in India, though you still owe tax in your home country.
NRO versus NRE: which account type you might need
An NRE account (Non-Resident External) is a different product designed for non-residents who want to move money in and out of India more freely. Money in an NRE account can come from abroad — you can wire funds from your overseas bank account. Interest is tax-free in India. Repatriation has no annual cap.
The trade-off is that an NRE account is meant for money earned outside India. If you have rental income from an Indian property or a pension paid in rupees, that should go into an NRO account. If you have savings from your job abroad and want to keep some rupees in India, an NRE account is the right choice.
Some non-residents open both accounts — an NRO for Indian-source income and an NRE for foreign-source savings. The bank can help you decide which account type fits your situation.
Opening an NRO account as a non-resident
You can open an NRO account online or by visiting an Indian bank branch in person if you are traveling to India. Most major banks offer NRO accounts to non-residents. You will need a valid passport, proof of your current address abroad (such as a utility bill or bank statement), and your PAN (Permanent Account Number) if you have one.
If you do not have a PAN, you can still open an account, but you will need to provide your passport number and country of residence. Some banks ask for a reference from an existing customer or a letter from your employer confirming your status as a non-resident.
The process usually takes one to two weeks once you submit your documents. The bank will send you a debit card and login credentials for online banking by mail to your address abroad.
Common reasons NRO accounts are used
Non-residents use NRO accounts to manage income earned in India without having to convert it to foreign currency immediately. If you own rental property in India, the rent payments go into an NRO account. If you receive a pension from an Indian employer or government scheme, it is paid into an NRO account.
An NRO account also lets you keep rupees on hand for trips to India without having to exchange currency each time you visit. You can withdraw cash at Indian ATMs and use the debit card for everyday expenses while you are in the country.
Some non-residents use an NRO account as a holding account while they decide whether to repatriate money or reinvest it in India. Because repatriation has an annual cap, spreading withdrawals across multiple years can be easier if you have a place to keep the money in the meantime.
Frequently Asked Questions
Can I deposit money from my job abroad into an NRO account?
No. An NRO account only accepts deposits from money earned in India. If you want to deposit your foreign salary, you need an NRE account instead. Some banks allow you to open both account types, so you can use each for its intended purpose.
What happens to my NRO account if I move back to India and become a resident?
Your NRO account will be converted to a regular resident savings account once you re-establish residency in India. You will need to notify your bank of your change in status. The conversion is automatic at most banks and does not require you to close and reopen the account.
Can I send all the money in my NRO account abroad in one year?
You can send the interest earned without limit, but the principal is capped at $1 million per financial year. If your account balance is higher, you can repatriate the rest in the following year. The bank will help you file the necessary forms with the Reserve Bank of India.
Do I pay tax on an NRO account in both India and my home country?
Yes, typically. India taxes the interest earned on an NRO account. Your home country also taxes worldwide income, which includes interest from Indian accounts. You may be able to claim a foreign tax credit for taxes paid to India, depending on your country's tax laws and any treaty between India and your country.
Is an NRO account safe if the bank fails?
Yes. NRO accounts are covered by the Deposit Insurance and Credit may provide Corporation (DICGC), which insures deposits up to 5 lakh rupees per account holder per bank. If the bank fails, your money is protected up to that limit.