Banking: Prashant Joshi

Today, Prashant Joshi, MD & Head, Private & Business clients (India), Deutsche Bank, answers your questions

I am going on a six-month assignment to Italy next month. Can I open an NRI or NRO savings account from there? What is the advantage of these accounts? I want to send some money to my family in India while I am away.

You can open a Non-resident External (NRE) savings account or a Non-resident Ordinary (NRO) savings account if you are going abroad for employment or for a period of more than 182 days. These accounts can be opened while you are abroad, by completing the formalities stipulated by the bank where you intend to open them.

NRE account gives you the benefit of unlimited repatriability of funds with no tax deduction at source (or TDS) on the interest earned. While the NRO account helps you to transact for your local needs like depositing rupee-denominated cheques or cash, making payments or book fixed deposits from that amount.

The funds in NRO account is repatriable with certain regulatory restrictions and is taxed as per local laws. You can send money to your family in India through various money transfer options like SWIFT/wire transfers, online money transfers or offline through one of the various providers. Online money transfer is the cheapest, fastest and most secure way to send money to India.

Which of these is a cheaper way to raise emergency funds - personal loan or loan on fixed deposit?

Taking a loan on fixed deposit is a cheaper and an easier way to raise funds in an emergency as compared to taking a personal loan. So instead of breaking your fixed deposit and bearing penalty charges, you can raise an advance against it of up to 90 per cent of the fixed deposit amount. The interest charged for fixed deposit loans is generally two per cent higher than the interest you receive on your fixed deposit. Loan against fixed deposit is usually provided as an overdraft facility, where the interest is charged only on utilisation and there is no prepayment penalty.

Against this, the interest on a personal loan will vary from 16 to 24 per cent and have prepayment penalty. Moreover, it may take longer for the personal loan to be disbursed as compared to loan against fixed deposit with the bank due to additional documentation requirements.

The views expressed are expert's own. Send your queries to yourmoney@bsmail.in