Banking beyond borders: Can US citizens open accounts in India?

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Subscribe to enjoy similar stories. When Ram learnt that his parents were attempting to transfer ₹10 lakh to his US bank account after selling a plot of land in India,he was not particularly pleased. The computer engineer working in the US knew that the simple gesture could turn into a logistical nightmare.

Transferring money from India to a foreign account can be cumbersome. Additionally, if the payment exceeds ₹7 lakh, tax collected at source (TCS) would be deducted, which could be claimed later. Ram felt that the whole process was too complicated for his retired parents to handle.

Fortunately, a solution came from a banker friend who, like Ram, is an overseas citizen of India (OCI) and holds a foreign passport. He had faced a similar situation recently but managed to sidestep the hurdles of filling out the required forms or TCS deductions. He had a non-resident ordinary (NRO) bank account back in India.

The Reserve Bank of India (RBI) allows not only non-resident Indians (NRIs) but also overseas citizens of India (OCIs) and persons of Indian origin (PIOs) to hold bank accounts in India, in the form of NRO, non-resident external (NRE), or foreign currency non-resident (FCNR) accounts. So, instead of transferring the money to his US bank account, Ram's friend transferred the funds to his NRO account. An NRO account is like a regular account where you can deposit income, capital gains, or gifts earned within India.

By doing this, he doesn’t have to fill out those forms, consult a chartered accountant CA, or even pay TCS on it. It’s much like transferring funds to any normal bank account in India. The funds held in the NRO account can be used to transact within India or invest in stocks, bonds, mutual funds, etc..