NRO accounts become attractive option for Indian expatriates
Attractive returns are making increasing number of Indian expatriates prefer Non-Resident Ordinary (NRO) accounts, bankers told Emirates Business.
The trend is much contrary to the scenario a few years ago when more than 90 per cent of the fund flows went into Non-Resident External (NRE) accounts.
Interest rate on fixed deposits in NRO accounts has gone up to even seven per cent in some cases making them a preferred option.
The trend may also result in increased remittances from the UAE to India. "The interest rate on NRO accounts is pretty high now. We are seeing a lot of customers preferring NRO accounts," said Ashok K Gupta, Chief Executive (GCC) Operations, Bank of Baroda.
Banks with their representative offices here are also promoting the NRO accounts more.
"Interest rate for NRO accounts is quite high, almost 6.5 per cent to seven per cent for one year," said Gupta.
Apart from the attractive interest rate, the drop in tax deductible at source is encouraging expatriate Indians to opt for the Non-Resident Ordinary accounts.
The tax deductible at source (TDS), which is currently 10-15 per cent, was more than 30 per cent on interest earnings prior to the double taxation avoidance agreement between the Gulf states and India.
More than 90 per cent of the funds flow was into NRE accounts a few years ago and the scenario has now changed, Abraham Tharian, Executive Director of South Indian Bank, had said in an earlier interview with this newspaper.
Bankers said customers with heavy deposits prefer to go in for NRO accounts.
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