How to transfer money from overseas to a NRE account?

John sent in the following email yesterday, and I thought this was a good topic for a post.

Hi Manshu,

I have opened NRE account but still not clear on transfer of money to NRE. If i want to transfer money to NRE account from overseas, will it transfer in foreign currency or it first gets converted into INR and then transferred to NRE account.

What is best, transferring money from local overseas bank or transferring through eRemit or Western Union.

Also is it good idea to transfer the local currency into USD and then transfer into NRE or can we transfer the local currency directly in USD into NRE account.

Thanks
John

This is a common question because there is in fact no link between an international bank, say a Bank of America and a NRE account opened with an Indian bank, and once you open a NRE account, it isn’t intuitive what the next step should be. The two accounts you now own are two distinct entities with no link to each other, and you need to use a third service to link the two and fund your NRE account.

A lot of Indian banks have their own money transfer service, and you can use that to fund your NRE account or use a third party service like Xoom.

What is the best way to transfer money to India?

I would imagine that the answer to this question depends on which country you are transferring money from, and while I don’t know about other countries, I can speak with some confidence as far as the US is concerned. Using Western Union or any other wire exchange service usually costs a lot more than a money transfer service like ICICI’s Money2India or Xoom. I have used Money2India for a very long time myself till I discovered Xoom, which is perhaps the best money transfer service (for India) that exists today. It is quick, has low fees, gives you a good exchange rate, and is transparent with the exchange rate you will get as well as what status your transfer is in.

If Xoom operates in your country then I suggest you give it a try, if not, then try one of the other services that

If you are overseas then transferring money from your resident country to your NRE account is the best bet.

A little background on the NRE account now. One of the key features of the NRE account is that the money in the NRE account is freely repatriable which means that it can be sent out of the country any time and there is no upper limit on it. This is different from other accounts like the NRO account which has a clearly defined limit, and in general the tendency of the government and RBI is to keep a close watch on foreign exchange going out of the country, and don’t allow it so easily.

The second important thing about this type of account is that the interest is completely tax free, and this is also different from any other account type.

In this light, it is easy to see that the ways you can fund your NRE account is limited. You need to use foreign currency to fund this account, and the easiest way to do that is to remit the money from your host country to India. If you are already in India and have foreign currency with you then you can also use that to fund your NRE account.

You can’t deposit INR in a NRE account fund it so the option to convert foreign currency to INR doesn’t really exist, and if your foreign currency is not one that is freely convertible then you need to first convert it in a freely convertible currency, and then deposit that in your NRE account.

Please ask any questions that I may have missed addressing in the post in the comments, and I’ll answer them.

33 thoughts on “How to transfer money from overseas to a NRE account?”

  1. I opened both NRE and NRO accounts. I have an international card for the NRO account and a debit card for NRE account. Which should I use to withdraw rupees? Which one should I use to withdraw Euros?

  2. This article is incorrect. I use westernunion.com for zero fees when doing bank to bank transfer or debit card to bank transfer — same day transfer.

    Exchange rate is much better than any other competitor. compare every time you transfer with xoom or money2india or any other site.

  3. My question is if I wants to exchange foreign currency like AED to INR at any foreign currency exchange dealer which authorised by RBI.
    So than the money which we get from aed to inr that i want in my nre account by online payment not in cash or in cheque.

  4. I’ve read all your comments and I have understood bits and pieces and have more questions.
    1. When I transfer money from
    Overseas account through a service like Xoom or transferwise, does it go as usd or inr into my nre account?
    2. Can I use the inr in my nre account to make transactions or buy or pay bills online in india?
    3. I understand that the only way to send to bank is to deposit in nre and not nro account, correct? Nre is tax free?

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  6. I have a query , We use 3rd party remittance to send money to India. The 3rd party usually convert the foreign currency to Indian rupees and send to our Indian Account. Now the issue is NRE account doesn’t accept Indian currency in deposit , so when we use third party transfer services the amount will not get credited in NRE Account or Does it? if does not get credited to NRE Account then DO we have to send money to NRO account and transfer funds NRO to NRE?

  7. Hello sir, I am working in Qatar. How much big money allowed to send to our own NRE account. Is there any limit for the year sending money from qatar to india on my own NRE account?

  8. Hi Manshu,
    Very good post.
    Just I need some clarification like
    Am currently working in UK and hold NRE/NRO account in India. Till now not transferred any money to NRE account.
    Can I sent GBP through Xoom to indian NRE account?
    Am using transferwise to transfer money. Can we use transferwise to transfer GBP to NRE account.

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