How to open an Indian bank account

Who is eligible for an Indian bank account?

Almost any local or foreigner in India is eligible to legally open an Indian bank account. It doesn’t matter if you are an Indian citizen, Indian resident, NRI (Non-Resident Indian), PIO (Person of Indian Origin), OCI (Overseas Citizen of India) or even a foreign tourist paying a short visit to India on a tourist visa. Please note that foreign tourists are only eligible for a NRO account upto 6 months.

Types of Indian bank accounts

Basically there are 6 types of Indian bank accounts that most people use:

1. Savings account
   A regular deposit account with a minimum interest rate. A savings account is mainly used by common people and the number of transactions you can make every month is capped. Many Indian banks have different varieties of savings accounts according to features, age and purpose.
2. Current account
   A deposit account without limits on the number of transactions. A current account is mainly used by traders, business owners and entrepreneurs. Unlike a savings account, a current account allows overdraft facility, which means the holder can withdraw more money than what’s currently available in the bank account.
3. Salary account
   A deposit account you can open as per the agreement the bank has with your employer. A salary account is an account where your employer will transfer your salary to. The bank where you have your salary account also maintains reimbursement accounts, where your allowances and reimbursements are credited to.
4. Fixed deposit account (FD)
   A deposit account where you can lock-in your savings in order to earn a decent interest rate on them. You can choose what sum of money you want to lock-in and for what period of time. That can be 7 days upto 10 years. In general you can’t withdraw money before the end of that period of time. Some banks offer early withdrawal facility, but the returns will be lower and/or you’ll have to pay a penalty.
5. Recurring deposit account (RD)
   A deposit account where you can lock-in a fixed sum of money regularly. Unlike FDs, you won’t have to deposit a large sum of money in one time. A RD allows you to deposit smaller amounts of money frequently for a certain period of time. That can be 6 months upto 10 years. When you open your RD you have to decide a certain sum of money, frequency and period of time for your deposits and you can’t change it afterwards. Generally, you can’t withdraw money before the end of that period of time. Some banks offer early withdrawal facility, but the returns will be lower and/or you’ll have to pay a penalty.
6. NRI accounts
   There are three categories of accounts that are mainly designed for NRIs: NRE, NRO and FCNR accounts. The NRE and NRO accounts are available as savings, current, fixed deposit and recurring deposit accounts. Unlike most resident accounts, NRE and NRO current accounts don’t offer interest. The FCNR is basically a fixed deposit account for foreign currency only.
   1. NRE (Non-Resident External)
      An Indian rupee account that’s mainly used to park your foreign earnings. You can deposit your foreign money into a NRE account and it will automatically be converted into Indian rupees at the prevailing exchange rate the bank offers. The interest on a NRE savings account isn’t taxed in India and you can always transfer the funds (whether initial amount or interest) back to your foreign bank account. The bank only charges a small (service) fee and applicable GST for this transfer. A joint NRE account can only be held with another NRI (not with Indian residents) and no income from India can be transfered to a NRE account, even when it’s on your own NRO account.
   2. NRO (Non-Resident Ordinary)
      An Indian rupee account that’s mainly used to park your foreign earnings and make payments in India. In this type of account, you can deposit foreign currency as well as Indian rupees. Unlike the NRE, you can hold a NRO account jointly with an Indian resident and you can receive income from India on a NRO account. Any income from India, including interest, is taxable and there are some limitations on sending money from a NRO account to your foreign bank account.

      NRIs, PIOs and OCIs can open a NRO account permanently, while foreign tourists can open a NRO account for maximum 6 months only.

   3. FCNR (Foreign Currency Non-Resident)
      A foreign currency account that’s mainly used to park your foreign earnings. You can’t really use it in India. It’s more like a fixed deposit account on which you can earn regular interest. You can hold this account for a period of minimum 1 year upto maximum 5 years. The principal amount and interest are transferable, but the interest earned is not taxed in India.

Costs for opening an Indian bank account

Opening an Indian bank account is usually free of cost. Indian banks usually only charge a small fee for the debit card, starting from something around 150 Indian rupees per year. Indian banks may also levy a small fee for certain kinds of transactions, demand drafts, special transfers or services at the branch. You can check their websites to find an overview of all costs and fees in detail.

Basically, if you make good use of online banking instead of going to the branch to avail the services and you don’t withdraw money from an ATM that’s not from your own bank more than 3-4 times per month, there will be very little extra costs.

I’ve got 2 Indian bank accounts with HDFC Bank and I pay only 180 Indian rupees per year for the debit card (I only have 1 debit card, for 1 account). This fee is including taxes. Until now I’ve only had to pay a tiny fee in case of speed transfers (it was a ₹5 fee on a transaction of ₹8000 for immediate money transfer). These kind of costs as well as taxes (TDS) get deducted from the bank account automatically.

Note: a bank can require a minimum balance of the bank account, especially if you are a non-resident. In rural areas the required minimum balance usually is ₹5000 and in urban areas it’s usually ₹10,000. In case the balance gets less than that, you may risk a small penalty fee and if it happens too many times, your account may be deactivated.

Documents

To open an Indian bank account you will need these documents:

• Proof of identity: for example Aadhaar card, Indian driving license or passport
• Proof of address: for example Aadhaar card, Indian driving license or passport (only if it contains your address). Some recent government correspondence, recent utility bill or recent bank statement will also do (only if they contain your full name and address)
• 1 recent passport-sized photograph
• NRI/PIO/OCI document or visa (only for non-residents)
• PAN card or Form60*

Often Indian banks require an Indian correspondence address too, even if you are a non-resident or foreigner. If you submit both foreign and Indian address, you will often be asked to prove only one of these addresses. Please note that if you want to change an address later, you will have to provide a valid address proof at the time of address change submission. Unless you change both addresses: in that case you will have to provide only one address proof.

Most Indian banks (especially the bigger ones, like SBI, ICICI, HDFC and Axis) will have all their communication online and will most likely use the correspondence address only for sending the welcome package, debit cards, checkbooks etc.

*Every taxpayer in India must have a PAN card. That’s why many banks require a PAN card in order to open an Indian bank account. If you don’t have a PAN card, you can obtain a PAN card or use Form60 instead. Whether Form60 is accepted, may differ as per bank and branch protocols. If accepted, Form60 will be available at the bank and the bank representative can assist you in filling and submitting it.

How to apply for an Indian bank account?

1. Choose an Indian bank and type of account according to your needs and requirements.
2. If possible, you can apply for the Indian bank account online. Not every bank has mentioned it on their website, but the Indian banks I mentioned before offer the possibility to open an Indian bank account online, so without you being in India. You can contact the bank of your choice for the procedure.
3. If you can’t apply for the Indian bank account online, for whatever reason, then you can visit a branch of an Indian bank. Enquire whether you have to make an appointment or not, especially outside India. In India you can just visit a branch of the bank.
4. Don’t forget to bring all documents, originals & self-attested copies. The bank representative will assist you in the entire process.
5. Generally, the bank account will be active within maximum 2 weeks and you’ll receive your welcome package (debit card etc.) by registered post. Registered post means that no one can receive your package except you and you’ll have to show some ID proof in order to receive it. You will be notified when the package is expected to be delivered. Often this happens by SMS on your registered phone number.
6. You will have to activate the debit card. The instructions may differ as per bank and you’ll usually find these instructions in the letter that comes with the debit card or on the website of the bank. There are also many Indians who have made videos on these kind of topics (basically all topics and FAQs related to banking), so YouTube may be very helpful too.

My advice

I would advise to go for SBI Bank, HDFC Bank, ICICI Bank or Axis Bank, as these are the bigger, stable and reliable banks in India and these are well-known for their NRI services too. SBI and ICICI also have many branches across the world. Axis only has 4 branches outside India. HDFC may not have any branches outside India, but many NRIs and Indian citizens consider them as the best bank in terms of service, customer care and professional behaviour.