When a person of resident Indian becomes an NRI, he/she needs to convert his Resident saving bank account to NRO account as per the income tax and Indian banking laws, e.g. FEMA.

All Indian residents are now asked to link up their saving bank account with Aadhaar card. Since NRIs cannot have Aadhaar card so to save their accounts from being seized they must convert it to NRO accounts.

As per latest guidelines if you won’t link up resident saving bank accounts to Aadhaar card the accounts will be frozen after 31^st march 2018.

The NRO accounts are not required to link with Aadhaar card. It provides the easiest way to access and operate the money and investments already made in India. These accounts can accept foreign remittances, can have a joint account holder who is an Indian resident, e.g. your father or mother, and RBI also allows repatriations from NRO account to overseas limited by a maximum annual amount.

NRI Residential Status

To convert your existing resident saving bank account to NRO account in India, you need to tell your bank about your NRI status. You must give a documentary proof that the account holder is now a non-residents India as specified in the Indian tax laws.

Once a person becomes an NRI, he/she cannot continue to hold bank accounts with resident India status.

Documents required to convert saving bank account to NRO account

To convert existing resident bank account into an ordinary non-resident account, you need to submit following documents to your bank:

1. Identity proof, e.g. Passport, Voter ID card, Driving License
2. NRI status proof, e.g. copy of your VISA or green card
3. Proof of foreign address, e.g. utility bills or foreign bank statements or telco bills
4. Recent photographs, not older than three months.

The account holder or applicant must render proof of overseas resident in the form of employment details, dependent visa status, student status, or a copy of the resident permit in the country he/she is currently living. This proof has to be attested by a notary, the Indian embassy, or an Indian bank with an abroad branch. However, this is optional; many banks accept the self-attested copy of reports.

If you also want to add your local Indian address for ease of operation in addition to an overseas address, you need to submit another local address proof with attestations.

Why you need NRO account?

NRI can hold 3 types of bank account in India, e.g. NRE, NRO, and FCNR. Out of these three, FCNR, which stands for Foreign Currency, Non-Resident is a foreign currency account which can just be open as fixed deposit with Indian banks. You cannot open an FCNR saving account.

This means for all your day-to-day need; you can either have an NRE saving bank account or an NRO saving bank account. Since you cannot deposit INR into NRE account, you must require an NRO account to deposit income you are getting in NRO, e.g. rental incomes, dividends obtained from your existing investment in Stock Market and just to receive INR from family or any friend.

In short, here are main causes behind opening NRO account:

1. i) To receive any income on Indian rupees, e.g. dividends or rental income
2. ii) In order to deposit INR as NRE account can only be funded using remittance or foreign currency

iii) To receive sale proceeds a property and land in India

That’s all regarding how to convert an existing resident saving bank account to NRO account in India. Remember, it’s necessary for an NRI to convert his resident Indian bank account to NRO account by law. The NRO account also provides you to deposit INR into your bank account because you cannot deposit INR into NRE account.