How are NRI deposits different from remittances?

Many Indians make plans to move overseas in order to get better career opportunities and earn more income. NRIs also have families and assets back home, and most of them plan to retire and return to their own country. While they’re living abroad, NRIs often send money back home to their families for their daily upkeep and make deposits in Indian bank accounts to invest, accumulate funds, and use them when they retire.

Now there are two main types of deposits that an NRI can make from overseas, and they’re often mistaken for each other and used interchangeably. These are ‘NRI deposits’ and ‘remittances’. Though both of these involve NRIs sending funds to India from abroad, they have some major differences and are aimed to fulfil different needs.

Let us look at the difference between NRI deposits and remittances in detail and find out what the two of them can be used for.

NRI Deposits

NRI Fixed Deposits are deposits done in foreign currency to an Indian bank by a Non-Resident Indian. An NRI deposit can only be repatriated or sent back to the original country after maturation, along with the earned interest as per the going NRI FD rates. NRI deposits are a good way for investors living abroad to invest in fixed deposit schemes in India. Some common NRI deposit schemes include NRE and NRO Fixed Deposits as well as FCNR (Foreign Currency Non-Resident) fixed deposits.

NRI deposits are usually made by Indian citizens working in the Middle East, who aim to use these funds when they return home on retirement.

NRI Remittances

NRI remittances are completely different from NRI deposits and cannot be used interchangeably with them. Remittances are usually funds sent in foreign currency by NRIs to their families back home. Many individuals living abroad have families in India, and they send remittances to their families for their day to day expenses and maintenance. Remittances are also sent for maintenance and upkeep of assets owned by NRIs. Remittances cannot be repatriated and usually come from North America, Europe as well as the Gulf countries.

Differences between NRI Deposits and Remittances

Even though NRI deposits are repatriable once maturity is attained, they are essentially investments made by NRIs in order to accumulate funds for a goal, like retirement. On the other hand, remittances are funds sent by NRIs to their relatives or families living in India. While NRI deposits are repatriable on maturation, remittances or not repatriable at all.

Even though NRI deposits and remittances are completely different and have different features and uses, they’re often confused with each other. The main reason for the confusion is their source. Since both NRI deposits and remittances are, in fact, sources of foreign exchange coming from NRIs living overseas, both are seen in the same light, leading to confusion.

Final Word

Thus, it is evident from the above that even though NRI deposits and remittances feel similar, they’re, in fact, different from each other and have different meanings and uses. NRI deposits are basically a form of investment, whereas remittances are a way for NRIs to send funds to their families back home.

We hope the above article makes the differences regarding the two clear, especially to persons who’re looking to move abroad and attain NRI status. They would need to plan and modify their finances accordingly to keep their affairs running in India without any hassles.

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