An NRO account is a savings account, not a current account

An NRO (Non-Resident Ordinary) account is classified as a savings account by Indian banks. It functions like a regular savings account in most ways — it earns interest on your balance, has withdrawal limits, and comes with a passbook or online access. The main difference is who can hold it: only non-residents of India (people living abroad) can open an NRO account.

The confusion arises because NRO accounts serve a different purpose than domestic savings accounts. While a regular savings account is for residents managing day-to-day finances in India, an NRO account is specifically designed for non-residents who need to hold rupees and manage income earned in India while living overseas. Despite this different purpose, the account type itself remains a savings account.

Current accounts, by contrast, are designed for businesses and high-volume transactions. They have no withdrawal limits, no interest on deposits, and higher monthly fees. Banks do not offer NRO current accounts — if a non-resident needs a current account, they must open a separate NRE (Non-Resident External) current account, which is a different product entirely.

Key Takeaways

  • NRO accounts are savings accounts that earn interest, even though they are restricted to non-residents of India.
  • The savings account classification means NRO accounts have withdrawal limits and monthly transaction caps, just like domestic savings accounts.
  • Current accounts are a separate product designed for businesses and high-volume users, and are not available as NRO accounts.
  • Non-residents who need a current account must open an NRE current account instead, which follows current account rules but is available to non-residents.

How NRO savings accounts work differently from domestic savings accounts

Although both are savings accounts, an NRO account has restrictions that a domestic savings account does not. An NRO account can only receive income earned in India — such as rent from property, pension, or interest from Indian investments. Money earned abroad cannot be deposited into an NRO account; that money goes into an NRE account instead.

Withdrawals from an NRO account are also limited. Most banks allow between 4 and 6 withdrawals per month at the counter, though online transfers and ATM withdrawals may have different limits. A domestic savings account typically allows unlimited online transfers and ATM withdrawals, with only counter withdrawals capped.

Interest rates on NRO accounts are usually lower than on NRE accounts. This reflects the fact that rupees held in India (NRO) are less valuable to banks than foreign currency deposits (NRE). The exact rate varies by bank and changes with market conditions.

When to use an NRO account versus other account types

Open an NRO account if you are a non-resident and have income earned in India that you want to keep in rupees. Common reasons include receiving rent from Indian property, collecting a pension from an Indian employer, or holding interest from fixed deposits opened before you left India. An NRO account lets you manage this money without converting it to foreign currency.

If you earn money abroad and want to send it to India, use an NRE account instead. NRE accounts accept foreign currency transfers and convert them to rupees at the current exchange rate. The money stays in rupees in India, similar to an NRO account, but the source is different.

If you are a non-resident business owner or freelancer who needs to receive frequent payments and make many transactions, an NRE current account may suit you better than a savings account. Current accounts have no transaction limits, though they also earn no interest and charge higher fees.

Interest rates and fees on NRO savings accounts

NRO savings accounts earn interest, but the rate is typically lower than NRE accounts. As of recent years, most banks offer between 2.5% and 4% annual interest on NRO savings accounts, though this varies by bank and changes regularly. Check with your specific bank for the current rate, as it is not fixed across the banking system.

Monthly maintenance fees on NRO accounts are usually waived if you maintain a minimum balance, which ranges from ₹5,000 to ₹25,000 depending on the bank. If your balance falls below the minimum, you may be charged a monthly fee of ₹100 to ₹500. Some banks waive fees for senior citizens or accounts with regular deposits.

Charges for exceeding withdrawal limits vary. If you withdraw more than the allowed number of times per month, banks typically charge ₹50 to ₹100 per extra withdrawal. Online transfers and cheque payments usually do not count toward this limit, so you can move money without penalty if you use digital methods.

How to open an NRO savings account

To open an NRO account, you must first establish that you are a non-resident. This means you have left India and are living abroad on a valid visa or residency status. You will need to provide your passport, visa, and proof of foreign address — such as a utility bill, rental agreement, or government ID from your country of residence.

You can open an NRO account either in person during a visit to India or remotely through your bank's online portal or by mail. Many banks now allow remote opening, which means you do not have to travel to India. The process typically takes 5 to 10 business days once you submit all documents.

You will also need to provide proof of income earned in India if you are opening the account to receive such income. This might be a rental agreement, pension letter, or investment statements. Banks ask for this to confirm that the account will be used for legitimate purposes.

NRO accounts and tax reporting

Income deposited into an NRO account is taxable in India, even though you live abroad. If you receive rent, pension, or interest in your NRO account, you must report this income to the Indian tax authority (Income Tax Department) and pay tax on it. The tax rate depends on your total income and tax bracket.

You must file an Indian income tax return if your NRO account income exceeds the threshold for your age group and status. Non-residents are taxed on income earned in India but not on income earned abroad. Interest earned within the NRO account itself is also taxable and must be reported.

Some countries have tax treaties with India that prevent double taxation. If you pay tax on the same income in both India and your country of residence, you may be able to claim a foreign tax credit. Consult a tax professional in your country to understand how NRO income affects your overall tax situation.

Frequently Asked Questions

Can I withdraw all my money from an NRO account at once?

Yes, you can withdraw your entire balance, but if you do it at the bank counter, it counts toward your monthly withdrawal limit. Most banks allow 4 to 6 counter withdrawals per month. To avoid this limit, request a cheque or online transfer instead, which usually do not count toward the limit.

What happens to my NRO account if I return to India permanently?

Once you become a resident of India again, your NRO account must be converted to a regular domestic savings account. You cannot hold an NRO account as a resident. Contact your bank to convert the account; the process is straightforward and usually takes a few days.

Can I transfer money from my NRO account to my NRE account?

Yes, you can transfer money between your NRO and NRE accounts at the same bank. This is treated as a regular transfer and does not count toward withdrawal limits. The money moves as rupees; no currency conversion happens because both accounts hold rupees.

Do NRO accounts have overdraft or loan facilities?

Most banks do not offer overdraft on NRO savings accounts. Some banks may offer a small overdraft facility if you maintain a high balance or have other accounts with them, but this is not standard. If you need borrowing capacity, a current account or a separate loan product may be more suitable.

Is there a limit to how much money I can keep in an NRO account?

No, there is no upper limit on the balance you can hold in an NRO account. However, large deposits or transfers may trigger reporting requirements under India's anti-money-laundering rules. Your bank will ask you to document the source of large sums, but this does not prevent you from holding them.