In India banking terminology, the term Non-Resident External or NRE Account refers to funds deposited with a financial institution that allows for the efficient conversion and transfer of Indian and foreign currency both within and outside of India.
For example, a NRE Account can only be opened in India by an NRI or Non-Resident Indian or by an Indian national who has lived outside of India for a period of no less than 180 days in the previous year. A Non-Resident External or NRE Account is typically opened using foreign currency and allows account holders to convert foreign currency into Indian rupees at the prevailing exchange rate on the date of conversion. An NRE Account also only allows for transfers in foreign currency, and the amount in this type of account is able to be freely repatriated to India. Also, the account holder is free to send funds out of India. The NRE Account is re-designated as a resident account upon the holder’s return to India, with foreign currency in the account then transferred to a Resident Foreign Currency or RFC account.