Importance Of NRO And NRE Demat Account | Share India
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Before making any investment decision, it is essential to know about demat accounts and their types. There are different types of demat accounts. There is a regular demat account, a minor demat account, a joint demat account, and an NRO and NRE demat account. The NRO and NRE demat accounts are essential for the investor who doesn't reside in India.

NRIs must own an NRE or an NRO account in India for their stock market transactions. According to the government of India, NRIs are prohibited from having a savings account in India. However, according to the legislation, an NRI can open an NRE/NRO account.

NRIs' primary source of income is outside the nation. Thus, the NRE and NRO accounts help manage finances, manage bank accounts in other countries, and even send and receive money in India.

What are the NRO and NRE accounts?

The NRE account is to keep all the foreign currency that is earned in INR currency. It is converted to an INR denomination that offers complete security. An NRE account can be in the form of a current, savings, or an FD, and recurring deposit. This account is used to convert foreign currency into Indian rupees. It is one of the quickest ways to convert foreign currency into INR. This can also transfer the interest or principal amount to a foreign account from this NRE account without any restrictions. Furthermore, a person needs to clarify the deposit amount earned in a foreign nation. You can also open an NRE account in the joint form. You will also receive the interest on the deposit of the NRE account where you can also be tax-exempt, which makes the principal as well as the interest amount tax-free.

Depositors can have the right to repatriate the amount deposited in the NRE account to use in the stock market. The investment for the NRE account is majorly used for carrying out personal banking,and business transactions for investment opportunities in India. Manage your risk effectively with our Intraday trading platform that provides real-time market data and analysis.

NRO account

The NRO account is used as a savings or a current account that is held by NRIs in India. This account is used to manage the income earned from several sources of income in India. The form of this income can be a pension, a dividend, or rental income, etc.

As account holders, you have the ability to deposit and manage your funds with ease. The major advantage of this account is that it allows you to store foreign funds in either foreign or Indian currency.

A user can open an NRO account jointly with an Indian resident or with an NRI, and they can also make the transfer from their current NRE account. However, the difference between both the NRE and NRO accounts comes at the time of withdrawal.


According to the Indian government, every NRI must have an NRE/NRO account in India for their transactions. It is not feasible for NRIs to have a savings account in India. This has been mandated by the legislation of India.

If NRIs make money in India as well as overseas, this can be a significant problem for regular demat account holders. The NRE and NRO Accounts can help investors easily manage their finances, manage funds in other countries, and also send and receive money from their home accounts. The NRO account is appropriate for investors who have a source of income in foreign country. Learn about NRI demat account and how to open one with our guide.

Explain the difference between NRE and NRO accounts

To discuss the difference between this demat account and through this demat account, NRIs can invest in the stock market. There are a few points that state the difference between these demat accounts.

  • Taxes

    An NRE account is a tax-free account where an account owner does not have to pay wealth tax, income tax, etc. But the interest earned in the NRO account is credited to balances under the respective tax bracket. The people who have an NRO account must pay applicable gifts and a wealth tax.

  • Transfer Of Funds

    With the NRE account, you can transfer interest and the principal amount to be freely transferable. But in the NRO account, the transfer can be one million dollars in a financial year, and you have to pay applicable taxes.

  • Withdrawal Currency

    In the NRE account, you can deposit your money in any currency and withdraw your amount in Indian currency. However, in the case of an NRO account, the deposit and withdrawal amount must be in an Indian denomination.

  • Deposit Criteria

    The Indian income generated cannot be added to your NRE account, whereas the overseas revenue generated cannot be added to the NRO account.

  • Transfer Conditions

    With the NRE account, you can transfer funds to another NRE and an NRO account. Unlike the NRO account, which allows transfers of funds from one NRO account to another, the NRE account does not allow transfers of funds.

  • Currency Difference

    Due to the conversion of currency in the NRE account, you make a loss on the change in the currency value of the currency you deposit and convert into INR. But in the NRO account, there is no risk, such as the conversion of currency.

Benefits of NRE and NRO demat account

Some of the advantages of NRO and NRE accounts are as follows:

  • An NRO account is used to deposit profits from different sources in India.

  • From the NRO account, you can transfer funds from the NRE account or outside of this account.

  • You can also open a joint NRO account with a resident of India. There is also a way to mandate an Indian-provided power of attorney to a person residing in India to assist you with all the banking and account-related operations for your NRO account with banks.

  • The advantage of an NRE account is that you can use it as a reimbursable savings account fund.

  • You can smoothly move funds outside India.

  • There will be no tax on the interest earned in the NRE account.

  • Your deposit is held in rupees.

  • You can open an NRE joint account with an NRI or a family member who lives in India.


If you are a non-resident Indian, you can't maintain a savings bank account and have a regular demat account. So, to save and invest in the Indian stock market, you need to open an NRO or NRE account to solve this problem. All the Indian and private sector banks offer an easy option to open an NRE and NRO account.

Frequently Asked Questions (FAQs)

Depending upon your requirements and eligibility, both accounts can be a good choice for your Indian stock market investment.

Yes, you can open both NRE and NRO accounts if you have a foreign income and an income from India. Remember to understand the difference and choose the most suitable account for your savings.

A minimum balance for the NRO account is one lakh rupees for metro urban areas, and for the semi-urban rural regions, it is fifty thousand rupees.
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