Hi Guys,
I opened 4 accounts while i was in India earlier this year:
1) 2 FCNR accounts (Foreign Currency Non Resident) accounts: These are dollar accounts and the interest is paid in dollars and the money can be easily repatriated to the US if required.
2) 2 NRE Rs accounts: These are Rs. accounts, basically the dollars that I gave were converted to Rs., i think the exchange rate that I got then was 49+, although I don't recollect exactly. They give a much higher rate of interest, where as the dollar accounts are slightly better than the CDs here.
I opened 4 accounts with me being primary on 2 and my wife being primary on 2. Of course we are joint on each other's. The reason for doing this, is to kick in the 1,00,000 insurance on each of the accounts.
I personally asked the manager about the 1,00,000 lakh insurance and he told me that's the law and advised me to go in for 4 accounts(although the Rs. accounts respectively carry much more than 1,00,000 Rs.)
In such cases you feel that nationalized banks are safer as they are backed by the Govt. of India, so in case they fail, Govt. would pay everybody their dues. Although in my 29 years of existence, I am yet to hear about a nationalized bank failing.
At the same time, interest rates are a bit lower. ICICI gives one of the best interest rates on the market. It's a classic case of higher the risks, higher the gains. Nevertheless, I am reading news stories about how greatly ICICI is doing(?). Worldcom and Enron were also galloping
, God only knows..
Lastly, all my accounts are in the FD format for 3 years and my dad has total authority to operate these accounts. You can nominate any one to operate these accounts, except that person cannot close the accounts and cannot get dollars from the dollar account. The last is treated as foreign currency withdrawal. He/She can withdraw as much as he/she wants, from the Rs. accounts
Thanks
180DaysGuy