The type of bank account that a Non Resident Indian must possess:
NRE: Non Resident external
NRO: Non resident Ordinary
FCNR: Foreign Currency Non Resident
RFC: Resident Foreign currency
RFC account can be held in US Dollars, Euros, Pound sterling. After having been a resident outside India, you may come back to settle down back in India. You may want to continue having your financial transactions in various foreign currencies while you are back at home.
Non Resident External offers maximum liquidity. Plan wisely and invest right. It provides an excellent investment avenue for your overseas fund. With NRE account, you get higher returns. It allows you to use any foreign currency for your financial transaction. There is no tax imposed on any income or interest earned through this account. You are free to use any foreign currency in order to credit your account.
Besides this, bank also lets you take your income earned abroad. In case of a Non Resident Ordinary account, this is not allowed. Your family back at home enjoys the freedom to withdraw cash from your account if you have added their name. Few banks permit you to have a zero balance in your account, while others may ask for Rs.10,000 as a minimum balance.
Non resident ordinary lets you save your earnings in India but you cannot take the earnings abroad. If you earn an income through rent, pension, dividend or interest, you can save them in this account. It is often maintained in rupees. You can create your bank account right away!