If you've moved to the UAE and started sending money home, someone has probably told you to "open an NRE account." But there are actually three account types available to Indian residents abroad — and choosing the wrong one can cost you in taxes, repatriation limits, or currency risk.
The three account types at a glance
| Feature | NRE | NRO | FCNR |
|---|---|---|---|
| Currency held | INR | INR | Foreign (AED, USD, GBP…) |
| Fund sources | Foreign earnings only | India income (rent, dividends, pension) | Foreign earnings only (FD only) |
| Repatriation | Fully free | Up to USD 1 million/year | Fully free |
| Interest — India tax | Tax-free | Taxable (30% TDS) | Tax-free |
| Account type | Savings / Current / FD | Savings / Current / FD | Fixed Deposit only |
| Joint account | NRI only (or resident on former-or-survivor basis) | With resident Indian permitted | NRI only |
NRE account — your primary salary account abroad
An NRE (Non-Resident External) account is where most UAE NRIs park their AED salary after converting it to INR. The key features:
- Tax-free interest in India — NRE savings rates are typically 3–4% and FD rates up to 7%+, with zero Indian tax.
- Fully repatriable — You can move money back to UAE (or anywhere) without limits or RBI permission.
- INR only — Your AED gets converted at the time of remittance. You bear the INR/AED exchange rate risk.
Best for: Sending your UAE salary to India, earning higher interest than a resident savings account, keeping funds liquid for future repatriation.
NRO account — for India-sourced income
If you have income arising in India — rental income from a property, dividends from Indian shares, or a pension — it must go into an NRO account. You cannot deposit India-sourced income into an NRE account.
- Taxable interest — 30% TDS (Tax Deducted at Source) applies on NRO interest. You may claim a refund or DTAA benefit when filing ITR.
- Capped repatriation — You can repatriate up to USD 1 million per financial year after taxes, with a CA certificate (Form 15CA/15CB).
- Can be joint with a resident Indian — Useful if a family member manages India finances on your behalf.
Best for: Managing India-based income — rent, dividends, pension, sale proceeds from assets.
FCNR account — eliminate currency risk
FCNR (Foreign Currency Non-Resident Bank) deposits are fixed deposits held in a foreign currency. If you deposit AED, you get back AED at maturity — no conversion, no rupee risk. Interest is also in the same currency and fully repatriable.
- Currency protection — Historically, INR has depreciated against USD/AED over time. FCNR eliminates this risk for the deposit period.
- Higher rates than overseas FDs — Indian banks typically offer competitive FCNR rates to attract foreign currency.
- Fixed tenures only — Minimum 1 year, maximum 5 years. No savings account variant.
Best for: Parking a lump sum (like end-of-service gratuity) in AED/USD without wanting to convert to INR yet.
Practical setup sequence for UAE NRIs
- Open NRE savings account — Most Indian banks allow online opening with your UAE residence documents. This becomes your primary India account.
- Open NRO account if needed — Only if you have rental income, dividends, or other India-sourced money.
- Consider FCNR FD for large lump sums — Especially for UAE gratuity payout when you want to preserve AED value.
Compare NRE vs NRO vs FCNR FD rates with our calculator →