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More than 1.75 million Indians are estimated to live in the UAE, making up almost a quarter of the country’s population. As most of them are employed in reasonably good jobs, there is a growing wealth among this community, a fact that has prompted banks to offer tailormade solutions for the needs of this population group. This is especially interesting for high net worth individuals who are seeking greater returns on their savings than they might get from a dirham or dollar account in the UAE.

Several banks in the UAE are now offering rupee-deposit schemes for NRIs, which not only bear higher interest rates than dirham deposits, but also come with easy remittance and checking facilities.

For example, Citibank UAE offers a so-called Twin Account especially for its Indian customers, which comprises a dirham account in the UAE and a related tax-free rupee account in India. It facilitates instant money transfers between both accounts and includes a free ATM card to withdraw money from the rupee account as well as an ATM card for the dirham account, an option that lets customers benefit from fluctuations between the two currencies.

A similar offer comes from Barclays, where NRIs save money in their home currency on a 4 per cent interest savings account or on term deposits with higher returns, not subject to taxation in India.

The Dubai branch of HSBC also offers rupee term deposits for NRIs with attractive interest rates. For example, such accounts held for more than one year can fetch between 6 and 9 per cent interest. The background of all this is that the Government of India has permitted NRIs to open rupee accounts in India in order to repatriate funds from their overseas resident countries. Thus, all of the rupee accounts opened at international banks in the UAE are actually being held in India but interest earnings are tax-exempt, and funds can always be converted back to foreign currency and/or be transferred out of India, since both principal and interest earned are freely transferable. There are basically two common types of NRI accounts: the Non-Resident External (NRE) account and the Non-Resident Ordinary (NRO) account. A NRE bank account is opened by depositing foreign currency at the time of opening a bank account. A Non-Resident Ordinary account is a normal bank account opened by an Indian going abroad with the intention of becoming an NRI. An NRI can also open this account by sending remittances from his country of residence or by transferring funds from his other NRO account. It offers the same facilities as an NRE account, except that any repatriation done through this account should be reported to the Reserve Bank of India.

Interest earned on the NRE account is totally exempted from income tax, and the credit balances in the account don’t attract any wealth tax. However, interest on any type of NRO account as well as the credit balance in this kind of account are taxed under the account holder’s tax bracket.

Among Indian banks that have launched NRI accounts in the UAE are ICICI, Bank of Baroda and State Bank of India (SBI), as well as a number of regional Indian banks with operations in the UAE. SBI, which operates representative office in Dubai, launched its offers at the end of 2011. “We provide all facilities that a representative office can extend in the UAE,” said Debajyoti Ray Chaudhuri, CEO of SBI’s branch at the Dubai International Finance Centre, when the offer was introduced last November.

Bank of Baroda has set up an Indian Desk at its main branch in Dubai. “We have done this in order to cater to the growing needs of NRI customers and to provide best services,” says Ashok K.Gupta, Chief Executive, GCC operations, Bank of Baroda.

ICICI’s representative office in Dubai offers the full range of NRI accounts. This includes the rupee plus account, a high interest bearing (up to 8 per cent), tax-free deposit account that is popular among Indian expatriates.