12 Best Financial Practices – Before Moving Abroad

What should you do before moving abroad? Leaving the familiar shores of India for a new life abroad can be both exciting and daunting. Packing your bags and chasing adventure abroad sounds thrilling, but navigating a new financial landscape can be daunting. From managing currency fluctuations to setting up new bank accounts, the initial financial hurdles can cast a shadow over your excitement. This blog is your one-stop guide to managing your finances effectively as you settle into your new home. From navigating legalities to budgeting for a new life, we’ll guide you through the crucial steps for a smooth and successful transition abroad.

The 182-Day Rule: After spending more than 182 days outside India, your residency status changes to NRI. This triggers regulations on how you can hold bank accounts in India.

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1 12 Best Financial Practices – Before Moving Abroad

12 Best Financial Practices – Before Moving Abroad

Before moving abroad convert your existing Saving Accounts to an NRO account

Before moving abroad from India, streamlining your finances is key. Consider consolidating your existing savings accounts in India into one or two. This simplifies managing your money overseas and reduces potential maintenance fees. Then, convert these accounts to Non-Resident Ordinary (NRO) accounts.

Why Convert to NRO?

  • Compliance: FEMA (Foreign Exchange Management Act) in India mandates that Non-Resident Indians (NRIs) cannot hold regular resident savings accounts. This is why converting your account to an NRO (Non-Resident Ordinary) account becomes compulsory. Failing to do so can lead to penalties.
  • Manage Existing Income: An NRO account allows you to deposit and manage income you earn within India even after you move abroad. This includes rent from Indian properties, pension payouts, or interest on Indian investments.

Tax Implications on Interest:

  • Taxable Interest: Interest earned on your NRO account balance may be subject to Indian taxes (TDS – Tax Deducted at Source) at a specific rate. The exact rate depends on your tax residency status and any applicable tax treaties between India and your new country of residence. It’s wise to consult a tax advisor for personalized advice.

Repatriation of Funds from NRO:

  • Limited Repatriation: Unlike NRE (Non-Resident External) accounts, funds deposited in your NRO account (the principal amount) cannot be freely repatriated abroad. You can generally only repatriate the interest earned on the account after paying any applicable taxes.
  • Exceptions: There may be exceptions for specific situations, like up to $1 million USD for certain NRI categories under FEMA regulations. Always consult with a financial advisor to understand the latest rules and limitations.

Open an NRE account

An NRE account allows you to deposit and manage income you earn outside India. This could be your salary from your overseas job, earnings from foreign investments, or business income generated abroad. You can open an NRE account in various convertible foreign currencies like USD, EUR, GBP, etc.

Tax Advantages:

NRE accounts offer significant tax benefits for NRIs. Interest earned on the account balance and the principal amount are not subject to tax in India, it is important to consider the taxes on the interest earned on NRE accounts in your new country of residence.

Repatriation Freedom – Easy Transfer of Funds:

A key advantage of NRE accounts is the ease with which you can repatriate your funds. You can freely transfer the money deposited in your NRE account (both principal amount and interest earned) back to your overseas country of residence without any restrictions or limitations imposed by the Reserve Bank of India (RBI).

Convert / Close your existing Fixed Deposits (FDs) and Recurring Deposits (RDs)

When you’re moving abroad and approaching the 182-day mark of being outside India, you’ll need to decide what to do with your existing Fixed Deposits (FDs) and Recurring Deposits (RDs) as your resident status changes to Non-Resident Indian (NRI). Here are your options:

a. Convert to Non-Resident Ordinary (NRO) Account:

This is the most common choice for NRIs. Here’s what you get with an NRO account:

  • Maintain Existing Deposits: Your FDs and RDs can be transferred to an NRO account, allowing you to continue earning interest on the principal amount you deposited before becoming an NRI.
  • Receive Deposits from India: This account can receive deposits originating within India, such as rental income, pension, or any other rupee-denominated earnings.

Points to Consider with NRO Conversion:

  • Maturity: The maturity date of your original FD/RD might remain unchanged, but it’s best to check with your bank for any potential adjustments.
  • Interest Rates: Interest rates on NRO accounts might differ from those offered on resident accounts.

b. Close the Accounts:

Converting your existing FDs (Fixed Deposits) and RDs (Recurring Deposits) to NRE (Non-Resident External) FDs or FCNR (Foreign Currency Non-Resident) accounts might be a good option if you have specific goals in mind for your money after moving abroad. Here’s why these options might be attractive:

Benefits of NRE FDs and FCNR Accounts:
  • Repatriation of Funds: A key advantage of both NRE FDs and FCNR accounts is the ability to repatriate the principal amount and interest earned back outside India. This is beneficial if you don’t plan to maintain strong financial ties with India or want easy access to your funds in your new currency. Utilize remittance limit of ₹ 7.5 lakhs without any TCS by splitting transfers out of India over two financial years.
  • Tax Advantages: Interest earned on NRE FDs is generally not taxable in India. FCNR accounts might also offer tax benefits depending on the specific scheme and your tax residency status in your new country. (Disclaimer: It’s important to consult a tax professional for specific tax advice based on your situation.)
When NRE FDs and FCNR Accounts Make Sense:
  • Long-Term Investment Horizon: If you plan to keep your money invested for a longer period, these accounts can offer competitive interest rates.
  • Foreign Currency Savings: FCNR accounts allow you to deposit and earn interest in a foreign currency, protecting your savings from fluctuations in the rupee’s value.
  • Future Needs Abroad: Having easy access to your funds in a foreign currency can be helpful for future expenses like buying a house abroad or funding your children’s education.
Things to Consider:
  • Limited Deposits for NRE Accounts: You can only deposit funds earned abroad into NRE accounts.
  • Tax Implications in Your New Country: While NRE FDs offer tax benefits in India, you might need to pay taxes on the interest earned in your new country of residence.
  • Early Withdrawal Penalties: Both NRE FDs and FCNR accounts might have penalties for premature withdrawals, so ensure your investment horizon aligns with the maturity period.

While NRO accounts allow you to hold rupee deposits and receive rupee-denominated income, they don’t offer repatriation benefits. Choose an NRO account if you plan to maintain financial ties with India and need access to rupees.

Retain only one credit card.

While there’s no strict requirement to retain only one credit card when moving outside India, there are several compelling reasons why keeping just one or a maximum of two cards might be a wise decision due to the following reasons:

  • Multiple Cards, Multiple Bills: Juggling multiple credit card bills with different due dates and interest rates from abroad can be a hassle. Simplifying your credit card portfolio to one or two cards minimizes paperwork and ensures timely payments.
  • Credit Reporting Agencies: Many countries have their own credit reporting agencies that may not consider your credit history from India. Building a new credit history abroad takes time. Keeping a manageable number of credit cards in India helps you maintain good credit utilization and avoid potential issues when applying for credit products like loans or mortgages in your new country.
  • Hidden Costs: Many Indian credit cards charge foreign transaction fees, typically a percentage of the total amount spent overseas. Using a single card with minimal or no foreign transaction fees can save you significant money, especially if you frequently make international purchases.
  • Managing Exchange Rates: Tracking exchange rates for multiple cards can be complicated. Having just one or two cards simplifies currency conversion and helps you stay on top of your spending.
  • Reduced Risk: Fewer cards mean less chance of losing track of them or falling victim to fraud.
  • Rewards Programs: If you have a credit card in India with a particularly rewarding program you plan to utilize even while abroad, you might consider keeping it. However, weigh the rewards against the annual fees and any foreign transaction charges.

Before moving abroad simplifying your credit card portfolio to one or two cards can offer significant advantages in terms of convenience, cost savings, and credit history management when moving outside India. Evaluate your individual needs and choose the cards that best suit your spending habits and financial goals.

Pay-off any outstanding personal loans or credit card

Paying off any outstanding personal loans or credit card debt before moving outside India is a wise financial decision for below reasons:

  • Peace of Mind: Moving to a new country is an exciting but often expensive experience. Starting fresh without the weight of debt allows you to focus on settling in and building a new life abroad without financial stress.
  • Improved Cash Flow: By eliminating debt payments, you’ll free up a significant portion of your income. This extra cash can be used for various necessities like housing, transportation, and unexpected expenses in your new country.
  • Time Zone Differences: Making timely loan or credit card payments from a different time zone can be tricky. Late payments can damage your credit score in India and potentially cause additional fees.
  • Currency Fluctuations: Fluctuations in exchange rates can make your debt repayments more expensive over time. Paying off your debt before moving eliminates this concern.
  • Limited Access to Credit Lines: Building a credit history in a new country takes time. Outstanding debt in India might make it difficult to qualify for new credit lines you may need abroad, like a mortgage or car loan.
  • Interest Rates: Interest rates on personal loans and credit cards in India can be high. Paying off your debt now saves you money on interest charges in the long run.
  • Debt Collection Issues: Dealing with debt collectors in India from a distance can be frustrating and expensive. Settling your debts beforehand avoids these potential hassles.

Continue your existing Term Life Insurance and Health insurance policies if you plan to return to India

Maintaining your existing term and health insurance policies in India ensures uninterrupted coverage. Obtaining a new policy in India might involve medical underwriting, which could be more expensive or even lead to denial of coverage depending on your health.

If you have any pre-existing medical conditions, obtaining a new health insurance plan in India might be difficult or expensive. Continuing your existing plan avoids this issue.

Close Bank lockers as you would be unnecessary paying the maintenance charges.

Accessing your locker becomes much more difficult once you’re overseas. The time and potential travel costs to visit India just to access your locker can be significant. Bank lockers typically have annual maintenance charges. By closing your locker, you eliminate these ongoing fees, saving money you won’t be using while abroad.

Alternatives to Consider:

  • Secure Deposit Box Abroad: Depending on your new location, you might find secure deposit box options from local banks. This can provide a similar level of security for your valuables in your new country.
  • Safe Deposit Box with a Trusted Contact: If you plan to return to India eventually, consider leaving your valuables in a safe deposit box held by a trusted friend or relative. Ensure they understand their responsibility and any associated risks.

Open/Continue your PPF account if you want to use that as part of your Fixed Income strategy;

If you had a PPF account while you were a resident Indian, you can continue contributing to it even after becoming an NRI. However, there are limitations:

You cannot open a new PPF account after becoming an NRI. Hence if you want to use PPF as a part of your fixed income strategy then create one before you lose your residential status in India.

  • The maturity amount can be transferred to your NRO account, but not necessarily outside India (check with RBI’s Liberalized Remittance Scheme).
  • Update your banking and investment KYC to NRI.

Update your banking and investment KYC to NRI

Updating your banking and investment KYC (Know Your Customer) to NRI status is crucial before moving abroad;

Why Update KYC?

  • Compliance: Maintaining NRI status in your KYC records ensures compliance with Indian regulations for financial transactions.
  • Continued Service: Without updated KYC, banks and investment institutions might restrict your account activity or even freeze them.
  • Tax Implications: Accurate KYC helps in smooth tax filing and avoids any potential complications for NRIs.

What to Update:

  • Personal Details: Update your address to reflect your new foreign residence.
  • Contact Information: Provide your updated phone number and email address reachable from abroad.
  • Residency Status: Inform your bank and investment institutions about your NRI status. You might need to submit documentary proof like a passport or visa.

How to Update KYC:

The process for updating KYC can vary depending on your bank or investment institution. Here are some common methods:

  • Online Banking: Many banks allow NRI KYC updates through their online banking platforms.
  • Email: Submitting scanned copies of required documents and a completed KYC update form via email is another option.
  • In-Person Visit: If you are still in India before moving, you can visit a branch in person to update your KYC. However, this might not be feasible for everyone.
  • Authorized Representative: In some cases, you can appoint an authorized representative in India to handle the KYC update process on your behalf.

Documents Required (may vary):

  • Proof of Identity: Passport, Overseas Citizen of India (OCI) card, or Person of Indian Origin (PIO) card.
  • Proof of Address: Utility bills, overseas bank statements, or rent agreements in your new country of residence.
  • NRI Status Proof: Valid visa/work permit/residence permit or a self-declaration with a document showing your connection to India (applicable for OCI/PIO cardholders).


  • Start Early: Initiate the KYC update process well before your departure to avoid any last-minute hassles.
  • Contact Your Institutions: Reach out to your banks and investment institutions for specific instructions on their NRI KYC update procedures.
  • Maintain Records: Keep copies of submitted documents and confirmation receipts for future reference.

By updating your KYC to NRI status, you ensure a smooth transition for your banking and investment activities even after moving abroad.

Reduce your Real Estate exposure because it is difficult to manage/dispose it off from abroad.

Managing real estate from abroad can be challenging, and disposing of it can be a complex process from abroad. Here’s a breakdown of why you might want to reduce your real estate exposure before moving abroad:

Difficulties of Managing Real Estate from Abroad:

  • Distance and Time Zone: Maintaining the property, dealing with repairs, and finding tenants can be difficult when you’re not physically present.
  • Market Knowledge: Local market fluctuations and regulations might be hard to keep up with from afar.
  • Finding Reliable Help: Hiring trustworthy property managers or contractors can be time-consuming and require careful vetting.

Challenges of Disposing of Real Estate from Abroad:

  • Market Timing: Selling at the right time to get the best price might be tricky when you’re not readily available for showings or negotiations.
  • Taxes and Legal Issues: Navigating tax implications and legalities related to selling property from abroad can be complex.
  • Currency Fluctuations: Fluctuations in exchange rates can impact your final proceeds.

Options to Consider:

  • Sell Your Property: Selling your property before moving abroad can free up capital and eliminate the hassles of remote management.
  • Rent Out Your Property: Renting can provide a steady income stream, but it requires ongoing management responsibilities. Consider hiring a reliable property management company to handle this for you.

Making the Decision:

The decision of what to do with your real estate depends on several factors, including:

  • Your Long-Term Plans: Do you intend to return to India eventually?
  • Financial Considerations: Evaluate the potential rental income, selling costs, and ongoing expenses.
  • Market Conditions: Is the current market favorable for sellers or renters?

Additional Tips:

  • Research the Market: Understand current market trends and rental yields in your area.
  • Consult a Tax Advisor: Seek professional advice on the tax implications of selling or renting your property as an NRI.
  • Consider a Real Estate Agent: A local real estate agent can help you determine the best course of action and handle the selling process if you choose to go that route.

By carefully considering these factors and exploring your options, you can make an informed decision regarding your real estate holdings when moving abroad.

Assign POA (Power of Attorney) to a person whom you trust to operate the financial transactions which you may not be able to do from abroad

A Power of Attorney (POA) is a crucial tool for managing your financial affairs when you move abroad. Here’s a breakdown of POAs and how they can help:

Power of Attorney (POA):

A POA is a legal document that authorizes a trusted person (called your attorney-in-fact or agent) to act on your behalf in financial matters. This can be particularly helpful when you’re not physically present to handle things yourself.

Types of POAs for NRIs:

  • General POA: Grants broad authority to your agent to manage various financial aspects, like bank accounts, investments, and property.
  • Special POA: Limits your agent’s authority to specific tasks, such as selling a particular property or managing a certain investment account.
  • Durable POA: Remains valid even if you become incapacitated in the future. This is especially important for long-term planning.

Benefits of a POA for NRIs:

  • Peace of Mind: Before moving abroad Knowing someone you trust can manage your finances ensures your bills are paid and investments are handled appropriately while you’re abroad.
  • Continuity: A POA allows for uninterrupted financial management even when you’re physically unavailable.
  • Flexibility: You can tailor the POA to grant specific authorities to your agent based on your needs.

Choosing an Agent for Your POA:

  • Trustworthiness: Select someone you completely trust with your financial well-being.
  • Financial Knowledge: Ideally, your agent should have some understanding of financial matters.
  • Communication: Choose someone you can easily communicate with and who understands your financial goals.

Additional Considerations:

  • Legal Requirements: POA requirements can vary depending on your location and the intended use. Consult a lawyer to ensure your POA is legally sound.
  • Scope of Authority: Clearly define the powers you grant your agent in the POA document to avoid any misunderstandings.
  • Review and Update: Review your POA periodically and update it if your circumstances change.

By establishing a POA before moving abroad with a trusted individual, you can ensure your financial affairs are handled smoothly even when you’re managing your life abroad.

If you want to invest in stocks in India, open Portfolio Investment Scheme (PIS/PINS) account

If you’re looking to invest in stocks on the Indian stock exchange after moving abroad, a Portfolio Investment Scheme (PIS) account is a good option. Here’s a breakdown of PIS accounts and how they can help you invest in Indian stocks:

PIS Account for NRIs:

  • Reserve Bank of India (RBI) Scheme: The PIS account is a facility introduced by the RBI that allows NRIs to invest in Indian equities through a designated bank branch.
  • Simplified Process: Using a PIS account streamlines the investment process for NRIs by eliminating the need for a trading account and separate registration with a broker.

Benefits of PIS Account:

  • Convenience: Invest directly through your NRI bank account.
  • Repatriation or Non-Repatriation: Choose between repatriating your investment proceeds (principal and capital gains) back to your home country or reinvesting them in India.
  • RBI Compliance: PIS ensures your investments comply with foreign exchange regulations in India.

Opening a PIS Account:

  • Eligibility: NRIs with a valid passport and eligible NRI bank account can apply for a PIS account.
  • Documents Required: The specific documents required may vary depending on the bank, but generally include passport, visa (if applicable), PAN card (if available), and NRI bank account details.
  • Contact Your Bank: Reach out to your NRI bank for detailed information on their PIS account application process and any associated fees.

Additional Points to Consider:

  • Investment Strategy: Do your research and develop an investment strategy before buying stocks.
  • Tax Implications: Understand the tax regulations applicable to NRI stock market investments in India.
  • Professional Advice: Consider consulting a financial advisor specializing in NRI investments for personalized guidance.

By opening a PIS account, NRIs gain a convenient and compliant way to participate in the Indian stock market. Remember to conduct your research, understand the tax implications, and potentially seek professional advice before making any investment decisions.

Don’t navigate your financial future abroad alone! Get a handy roadmap for all the essential financial steps you need to take before moving abroad. Schedule a free introductory call today with us for personalized guidance tailored to your unique situation and goals. Embrace your adventure abroad, financially prepared! Let’s make your international journey a smooth success.


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