Invest through NRE account or NRO account?

I am an NRI from Singapore and I hold my mutual fund investments in repatriable through NRE accounts. Some of my NRI friends are investing in non-repatriable basis through NRO / Domestic account. What is the difference between them? And which scheme will be the best for NRIs to invest in mutual funds?
- Manikandan Palanivel

Balances held in NRE accounts can be repatriated abroad freely, whereas funds in NRO accounts cannot be remitted abroad but have to be used only for local payments in rupees.

Non-Resident (External) Rupee (NRE) account is a rupee account from which funds are freely repatriable. It can be opened with either funds remitted from abroad or local funds maintained in NRE/ FCNR accounts, which can be remitted abroad. The deposits can be used for all legitimate purposes. The balance in the account is freely repatriable. Non-Resident Ordinary Rupee (NRO) account is a rupee account and can be opened with funds either remitted from abroad or generated in India. The amounts in such an account are generally non-repatriable. However, funds in NRO accounts can be remitted abroad subject to/as per various directives in force at the time of repatriation.

This article was originally published on February 08, 2016.