How to open a bank account in India

15.05.17
8 minute read
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Are you planning a permanent move to India? Enticed by the rich cultural history, or perhaps the delicious cuisine? We don’t blame you.

India has long been popular as a holiday destination, and with good reason. Not only are there lots of different cultures to experience and places to explore, it’s also incredibly beautiful.

But India is more than just a holiday destination. With one of the fastest growing economies in the world, more and more people are choosing to move to India to pursue their career whilst making the most of what this huge country has to offer.

Thankfully, once you arrive and start to get yourself set-up, opening a bank account is often as easy as it gets.

Read on to find out how to do it.

Can I open a bank account as a non-resident?

You can, but this is tricky. Non-resident accounts are only available to Non-Resident Indians (NRIs), Persons of Indian Origin (PIOs) and Overseas Citizens of India (OCIs). If you don’t fall into any of these categories, you’ll need to be living in India before you can open an account. You can start with a ‘small’ account, but more on that later.

There are 3 types of bank account you can open as an NRI, PIO or OCI:

  • a Non-Resident External Account (NRE)
  • a Non-Resident Ordinary Account (NRO)
  • a Foreign Currency Non-Resident Account (FCNR)

Let’s have a look at each of them.

Non-Resident External Account (NRE)

This is a traditional bank account in Indian rupees.

You can freely make deposits and withdrawals from the account, including international transfers. This makes it ideal if you’re looking for a place to keep your money safe without losing access to it during a short stay. Many accounts also come with an Indian debit card you can use for ATM withdrawals and to make payments.

And if your account bears interest, this will be exempt from Indian tax.

Non-Resident Ordinary Account (NRO)

Like non-resident external accounts, this type of account is also a traditional bank account in Indian Rupees. However, there are a number of important differences.

An NRO is less flexible than an NRE, and is better suited for longer stays.

There are limits to how much money you can transfer back to your home country out of this account. You’ll also need an accountant to do the paperwork for you.

More importantly, if you earn any form of income in India, this is where you’ll need to deposit it. Any interest will be taxed by the Indian government.

You can only open an NRO for up to 6 months.

Foreign Currency Non-Resident Account

This type of account can only be opened in a foreign currency, so it isn’t particularly useful if you’re looking for an Indian account to use during your stay.

Unlike a traditional bank account, an FCNR is a fixed deposit which pays regular interest. This makes it better suited as an investment, rather than a working account for your day-to-day needs.

You must keep the account open for at least 1 year, but not more than 5 years.

What documents do I need?

Whether you want to open an account as a resident, NRI, PIO, or OCI, you’ll need to provide proof of identity and proof of your address, as well as a recent photograph.

You can prove your identity by presenting your passport or your driving licence.

If these documents contain your address, they can also be accepted as proof of address. If they don’t, you’ll need to submit at least another document.

Which documents are acceptable as proof of address will depend on whether you’re applying for a resident or non-resident account.

Proof of address for non-residents

If you’re applying for a bank account as a NRI, PIO, or OCI, you can present one of the following documents as proof of your address:

  1. A recent utility bill (not more than 2 months old)
  2. Bank statements for the last 3 months, containing at least 2 transactions you initiated yourself
  3. Correspondence with a government department or authority or your valid, unexpired driving licence (if it bears your address)

Proof of address for residents

A recent utility bill (not more than 2 months old) and bank statements for the last 3 months with at least 2 transactions you initiated yourself will also work as proof of your Indian address.

Alternatively, you can present your Aadahaar Card, which is sort of the Indian equivalent of an identity card and social security number, rolled into one.

Some banks may also accept other documents as proof of address. These include a PAN card, government correspondence, a letter from your embassy in India and even a municipal or property tax receipt. It’s entirely up to individual banks to decide whether to accept these documents, so you’ll need to confirm with your bank beforehand.

Small accounts

Don’t have a document to prove your address?

No problem!

You can still open an account, called a small account, by providing a photo and signing it or putting your thumb impression on it in the presence of a bank official.

However, small accounts have a number of limitations compared to a normal account, namely:

  1. The balance in your account can never exceed INR50, 000 (approximately USD$750)
  2. You cannot credit your account with more than INR1,000,000 (about USD$15,000) in a given year
  3. You cannot transfer or withdraw more than INR10,000 (USD$150) a month
  4. You cannot make an international transfer directly into or out of the account

Can I open a bank account from abroad?

If you want to open a resident bank account, you’ll need an Indian proof of address. This is very difficult, if not impossible to obtain unless you’re physically present in India.

On the other hand, applying for a non-resident bank account from abroad is very easy. In fact, you can do it without ever setting foot in India.

In some cases, you can submit your application online, via the bank’s website. However, most of the time, you’ll need to download an application pack and fill it in by hand.

Depending on the bank, a customer representative may book a phone call with you to go over the application and ensure that you’ve filled it in correctly. You’ll also need to get your documents self-attested and notarised. You self-attest your documents simply by signing on every page.

After the application is complete, you’ll need to mail the documents over for processing. Very often, you’ll also need to make a minimum initial deposit. This can even be in your own currency, which will then be converted into rupees. Be careful though, as you may not always get the best exchange rate when you do this.

Which bank is best for my needs?

India is huge, and so is its banking system.

However, the four largest banks are State Bank of India, ICICI Bank, Punjab National Bank and Canara Bank. Unfortunately, most of them have fairly basic products with not too many perks.

Here’s what they each have to offer.

State Bank of India (SBI)

State Bank of India is by far the largest bank in India, with a staggering 9143 branches across the country. It’s also the country’s oldest bank.

The bank offers both non-resident accounts and accounts for residents.

A resident current account will include an ATM debit card that’s free for the first year as well as personal accident insurance for an additional premium.

While the bank doesn’t offer a current account specifically for students, it does offer a savings account for people aged 18 to 30. However, this doesn’t have much in the way of benefits other than it being free of charge and having a free ATM card.

There’s also a selection of business products to choose from, including two current accounts and deposit facilities that can pay up to 6.71% interest for 60 days.

ICICI Bank

ICICI Bank’s non-resident accounts are great because they offer up to 3% cashback on bill payments you make via internet banking, a MasterCard debit card with big discounts and free personal accident and air travel protection insurance.

They also have tailored personal and business accounts.

In particular, the Salary Account includes a free international debit card and gives you reward points for paying your bills online, shopping online or even for simply activating your internet and mobile banking facilities.

Your choice of business account will depend on your annual turnover. Different accounts have different free deposit amount limits. However, all include an advisory investment service to help you make the most of your business assets.

The bank doesn’t have a tailored student account. However it does offer a Child Education Plan to help you save up for education expenses from as early as kindergarten.

Punjab National Bank (PNB)

Like the other major Indian banks, Punjab National Bank offers products for both residents and non-residents.

Products for residents include a Current Deposit Account with a free ATM debit card and free internet banking which you can open whether you’re an individual or a business customer.

Canara Bank

Besides basic accounts for non-residents, Canara Bank has a Current Account that’s suitable for individuals and businesses alike.

There is also a Junior Savings Account. However, this is aimed at children rather than students. It’s available to anyone over 10 years old and comes with a debit card. It’s main draw is that it has a restricted monthly withdrawal limit to prevent excessive spending.

What are the costs?

Unfortunately, banking in India is quite expensive. There are a number of fees and charges you’ll have to look out for.

Maintenance and card fees

Most bank accounts India aren’t free. You’ll need to pay a monthly account fee - called a maintenance fee.

You’ll also have to keep a minimum balance in your account, or risk a fee in the region of INR 500 (about USD$7.50). Similarly, ATM debit cards aren’t free.

ATM Fees

The cost of maintaining India’s vast ATM network is a big issue in the industry. Because of this, most banks limit the number of ATM withdrawals you can make each month.

Most banks will allow only 3 free transactions a month, after which you’ll incur a fee in the region of INR 20 (USD$0.30) plus tax per transaction.

But that’s not all.

Indian banks don’t just charge you for making withdrawals. You may also be charged for using an ATM in other ways, including requesting a mini statement or even just making a balance enquiry.

Making withdrawals from an ATM abroad is even more expensive. You can expect to pay approximately INR 125 (about USD$2) per transaction, as well as other assorted service taxes and charges.

Account closure fees

Many Indian banks will let you close your account free of charge during the first 14 days after opening.

However, expect to be charged an account closure fee once this period expires. The fee can tend to get higher the longer you’ve held your account.

International money transfers (remittances)

International money transfers, which most Indian banks call remittances, are equally costly.

At the very least, you can expect to be charged a processing fee and a service tax of up to 0.12% (depending on the amount of the transfer). You’ll also need to watch out for the other bank’s charges as well as a foreign exchange fee or unfavourable exchange rate.

Banks tend to adjust the exchange rate they use for international transfers, to make sure it benefits them. So your recipient gets a little less money than they could, if the banks used the same exchange rates for you that they use to trade money among themselves. And this will happen for transfers both to and from India.

Once you’re in India, and your account is set up, if you need to move some money to India - consider TransferWise. The transfer fee is stated upfront, so there are no hidden costs. And with TransferWise, your money is worth as much as if you were trading currency on the global markets like high streets banks do. You’ll get the mid-market rate, the same rate you find on Google. So you get more of your money in your brand new Indian account.

Moving to India can be daunting, as you’ll likely be hit with a culture shock when you arrive. However, as you’re settling in and adjusting to your new home - you can be confident that all your banking needs will be met if you follow this guide. Good luck!

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