NRO accounts are used to normally make payments locally and funds can be remitted from India (in rupees) or abroad. NRIs can open two types of accounts: NRO (Non-Resident Ordinary) and NRE (Non-Resident Rupee) account. However, it is advisable not to do so, given the fact that there is a TDS on interest rates on NRO accounts. The funds can be transferred from this account to an NRO account. The funds are repatriable and can be sent to any country outside India. 10,000 from all the savings account with the bank). The advantage of having NRE accounts is income earned as interest is exempted from tax (no TDS deduction as in regular savings account which qualifies for TDS if interest income in a FY exceeds Rs. This is true for NRE Savings Account as well for NRE Fixed Deposits. The one good thing of the NRE Savings Account is that the interest income is tax free in the hands of the investors.
The Reserve Bank of India had a few years ago lifted the interest rate cap on NRE FDs, which were linked to the LIBOR (London Interbank Offer Rate).
