NRI Savings Account Review

In the last 10 years or so, the government ofIndia has liberalized its financial policies to attract investments from NRI, PIO, OCI investors. Most of the big banks offer savings account for non resident Indians.

Savings Accounts

 There are three types of savings account available. The following table summarizes their unique features.

Accounts	NRE	NRO	FCNR
Purpose of account	To park money in a savings account after converting it to Rupees.This money can be easily transferred to and you’re your overseas   bank account.This is known as free repatriation.	To park money in a savings account after converting to Rupees and Indian earnings.Funds in NRO account cannot be remitted abroad but used only for local payments in rupees.This account is useful for people who own properties or businesses in  India and are collecting earnings.	To park overseas savings without converting into Rupees.This money can be easily transferred to and you’re your overseas bank account.This main purpose of this account is to provide currency stability. As you know, Rupee value increases or decreases depending on market forces. But, if you had a US Dollar denominated FCNR account
Currency	Rupees	Rupees	USD, GBP, EUR, AUD, CAD, JPY
Transfer of Principle	Freely Repatriable	Not freely transferable	Freely Repatriable
Transfer of Interest	Freely Repatriable	Subject to taxes	Freely Repatriable
Taxes in India	Interest income is tax free in India	Interest income is taxed as per Indian tax code.	Interest income is tax free in India
Current Interest Rates on pure Savings account as of April 2012	3-4%	3-4%	2-2.5%
Current Interest Rates on Term Deposits as of April 2012	9-9.5%	9-9.5%	1-2.5%

If you have set up NRE, NRO, or FCNR accounts, then you can also open Fixed Term Deposits in those accounts. Due to recent deregulation of interest rates by the Reserve Bank of India (RBI), the interest rates on term deposits are quite competitive.

Which Indian Bank offers the best savings account?

In my view, the answer to this question depends on the following factors.

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  Forex Rates: How competitive rates are?


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  Speed: How soon your money is credited to your Indian bank account?


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  Internet Banking: How easy is it to use the bank user interface?


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  Customer Service: How courteous and timely is their customer service?


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  Local Branch: If you don’t live in a big city in India, then how far is the local branch where you would open this NRI account?

You will have to weigh pros and cons of each bank against these or any other factors that may matter to you in this important decision. Some banks are better in some factors than other banks. Therefore, you will need to make these comparisons yourself. I recently dealt with 3 major banks with opening a savings account. So, I will compare these three banks against these factors.

Factor	State Bank of India (SBI)	Axis Bank	Kotak Mahindra	HDFC **NEW
Forex Rates	SBI offers high Forex rates on a consistent basis. Their rates are higher by 20+ paisa than most other banks.	Axis bank also offers competitive exchange rates, although not as high as SBI.	Kotak Mahindra also offers competitive exchange rate that are always on par or above SBI exchange rates.	HDFC interest has gotten very competitive nowadays. It is on-par or above SBI on most days and therefore is making the playing field level.
Speed	It takes about 5 business days.	It takes about 5 business days.	It takes about 5 business days.	It takes about 5 business days.
Internet Banking	SBI’s internet banking user interface is NOT easy to use. It is a pain to get Internet Banking user name and password as you would have to request it from the local branch where your account is located. Trust me, you feel helpless when you don’t have Internet banking user name and password.	Axis Bank offers a very easy to use Internet banking interface.	Kotak Mahindra also offers a very easy to use Internet banking interface.	After having gone through the NRE & NRO account opening process recently, HDFC is my new favorite because of the ease of use on their account opening process as well as their banking interface.
Customer Service	SBI’s customer service is not that great. Call center people are good and courteous, but if you need to deal with local branch,   they are a pain to deal with. It has taken them more than a week to respond to my emails to local branch.	Customer Service of Axis Bank seems responsive and courteous. My emails were promptly responded with helpful guidance.	Customer Service of Axis Bank seems responsive and courteous. My emails were promptly responded with helpful guidance.	I cannot say enough about how courteous and professional HDFC customer service reps were. I was followed up with multiple calls each week as well as via email to let me know the status of the account opening process. Once my account gets opened, I am pretty sure they will have great customer service as well.
Local Branch	For me personally, this is a big factor. I live in a rural part of India. So, SBI is the only available choice. Axis is nearby, but not in the same city. Kotak is far away (6 hours of drive) from my place.	One advantage of Axis Bank is that you can bank at any of their branches. So, if you are traveling to a different city, you can simply go to the branch. It is very convenient. Plus, Axis has lots of branches in all major areas.	Kotak Mahindra for whatever reasons seems limited to big cities. While I liked this bank, it is currently out of the question because I find Indian banks hard to deal with for certain things where they ask to   come in person. For example, closing of the account, or withdrawing money. For this very reason, I will not be going with Kotak even I like them as a company and a bank.	HDFC has been in a place 20 kms from my rural town, so it is not bad to travel. Also, they are currently in the process of opening an extension counter in my town. So, I will not have to travel that far. This has sealed the deal for me to open an account with HDFC. When I go to India, I will plan on closing my current account with SBI as I have not been very happy with their customer service I received recently.

How to open NRI Bank Account

Most bank these day offer forms you can fill out online, then generate PDF, sign it, and send it along with your documents. HDFC, Axis and Kotak also offer PO Box service where you can send your documents to a PO Box in the US, which then get forwarded to your branch in India. Typically following documents are needed while opening NRI savings bank account. You will need to check with your particular bank on any additional or specific documents.

Option 1: Attestation by Notary Public or Indian Embassy

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  Attestation of your Passport & Visa copy (relevant pages) done only by a Notary Public or Indian Embassy Official or Existing Bankers of your location.


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  Separate Indian address proof to be attached, if address in your passport and form is different.PLUS, the above documents should be accompanied by any one of the following additional documents:
  
  
  
  
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    A self-drawn check drawn on a bank account abroad
  
  
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    A self-drawn check drawn on a bank account (NRE/NRO account) in  India
  
  
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    Any Cancelled paid check drawn on a bank abroad showing the signature, bank name, account number etc.
  
  
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    Original overseas/ Indian Bank Statement not more than 3 Months old from the date of A/c opening with at least 3 customer-induced transactions.
  
  
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    Original overseas/ Indian Credit Card Statement not more than 3 Months old from the date of A/c opening.
  
  
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    Attested Copy of Passbook issued by an Indian Bank showing Name, account number etc. with recent entries dating not more than 3 months from the date of account opening with minimum 3 customer-inducted transactions.
  
  
  
  

Option 2: Self Attestation

• Copies of relevant pages of current live Indian Passport Self signed by respective applicant.


• Copy of Valid Visa or Work permit or Residence card - Self signed by respective applicant.


• PLUS, the above documents should be accompanied by any one of the following additional documents:
  
  
  
  • A self-drawn check drawn on a bank account abroad
  
  
  • A self-drawn check drawn on a bank account (NRE/NRO account) in India
  
  
  • Any Cancelled paid check drawn on a bank abroad showing the signature, bank name, account number etc.
  
  
  • Original overseas/ Indian Bank Statement not more than 3 Months old from the date of A/c opening with at least 3 customer-induced transactions.
  
  
  • Original overseas/ Indian Credit Card Statement not more than 3 Months old from the date of A/c opening.
  
  
  • Attested Copy of Passbook issued by an Indian Bank showing Name, account number etc. with recent entries dating not more than 3 months from the date of account opening with minimum 3 customer-inducted transactions.
  
  
  
  

 What does self attestation mean?

Self Attestation means you write the following words somewhere on the document : "This is true copy of the original" and underneath these words, you sign your name. That's it. This process is called "Self- Attestation" whereby you don't need a notary to attest your documents.

Conclusion

SBI is a good enough bank on a lot of fronts. If you can deal with Internet banking interface and an okay customer service, then it offers the best bang for your buck. For me, that is the goal.

Update 7/25/2012: My new favorite NRI bank is HDFC. They have treated me very fairly and with respect all along with my account opening. Their NRI Account Executive has followed up with me to keep me updated with the status. My account should be opened within a week.