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If there is no money to deposit from outside India to Indian account, though the status is NRI, is it mandatory to convert savings account to NRI/NRE account?

What are the penalties of not converting ordinary savings account to NRE/NRI account?

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So long as you don't have transactions (specifically international) the banks may say that you should convert your account but won't be able to enforce it. And then if there are no transactions at all then the bank may initiate steps to deactivate the account and you'll start getting notifications saying so.

Now if you do live outside India you may at some point think about sending money and perhaps even withdrawing. At that point your only option is to convert the accounts. You will not be able to create new NRE/NRO accounts while still keeping your Ordinary Savings/Current account because banks will have your info through KYC (Know Your Customer). So that is where they'll enforce your decision one way (convert accounts) or the other (close and create new NRE/NRO accounts).

If the money in those accounts is not a lot there may not be penalties in leaving them like that but if there is significant amount and you stand to gain significant interest, there may be taxes. In dealing with these taxes it may come out that you are NRI and hence be advised to convert your accounts.

You'll find specific links on your banks website too. To reiterate, it is illegal to maintain ordinary accounts as NRI. The enforcement has become stricter over the last few years esp with countries agreeing to do so to stop money laundering. One snippet from a reference site:

Most individuals make a mistake of continuing a resident savings account even after becoming a NRI but the law does not allow it. Or in simple words it’s ILLEGAL to hold savings bank account for NRIs. As per FEMA regulation, when a status changes to NRI the resident savings account have to be converted to a NRO account.All income which is receivable in India such as rentals from property, investments, pension etc has to be deposited in this account and any payment towards insurance premiums or EMIs on loans which you availed while in India also has to be mandated from NRO account. For this you need to inform your bank on status change within a reasonable time period.(This period is not defined but you can consider maximum 3 months)

In my case I was able to stave it off for a few years because nothing was deposited nor taken out for all that time but the moment I wanted to start investing, I had to convert my accounts.

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A Savings account need to be converted to NRO. You cannot convert it to NRE.

Failure to do so is violation of Foreign Exchange Management Act

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