5 Operational Differences Between USD and INR Investments

Rahul opened an NRE FD with HDFC Bank from Dubai in 2023.

Took about a week. He uploaded documents, transferred dirhams (converted to rupees), and the FD was booked.

In 2025, he tried a USD FD in GIFT City. Same HDFC Bank. Same passport.

But the process felt completely different. Different branch (an IBU, not a regular branch). Different KYC. Different way of sending money.

Different rules at maturity.

At Belong, we hear this confusion every week. NRIs assume USD investments work just like INR ones with a different currency label.

They don't. Here are the five operational gaps that catch NRIs off guard.

1. How Money Moves In (and Why Your NRE Transfer Route Won't Work)

With INR investments like NRE or NRO FDs, you send dirhams or dollars from your UAE bank.

The Indian bank converts them to rupees at their exchange rate and credits your NRE/NRO account. The FD is booked in rupees.

With GIFT City USD investments, there's no currency conversion at all.

You wire USD directly from your UAE bank to the GIFT City bank's nostro account via SWIFT. The money stays in dollars throughout.

This sounds simpler. But operationally, it creates two issues NRIs don't expect.

First, SWIFT transfers take 2-3 business days and may involve correspondent bank charges (typically $15-30 per transfer).

Your UAE bank may also charge an outward remittance fee.

These are different from the conversion-based fees you pay on NRE transfers. Check your UAE bank's fee schedule before wiring.

Second, you cannot fund a GIFT City FD from your existing NRO account. Under FEMA guidelines, GIFT City is treated as "foreign territory" for financial purposes (Source: IFSCA).

Domestic rupee accounts can't directly feed into it. You must use your overseas bank account. This trips up NRIs with large NRO balances.

👉 Tip: Transfer a small test amount ($100-500) first to confirm the routing. SWIFT details vary by bank. One wrong digit delays the transfer by days. Read our guide on how to open a GIFT City account for bank-specific instructions. Or skip the bank entirely and use the Belong app to fund your wallet in USD and invest directly.

2. KYC Is a Different Process Entirely

For an NRE account, most banks offer online account opening from the UAE. You need your passport, Aadhaar (linked to PAN), address proof, and sometimes in-person verification.

GIFT City accounts run through IFSC Banking Units (IBUs), technically overseas branches regulated by IFSCA instead of RBI. The KYC requirements differ.

You don't need Aadhaar for GIFT City accounts. Passport, overseas address proof (utility bill or bank statement under 3 months old), and Emirates ID suffice (Source: Belong GIFT City Guide).

PAN is optional for basic opening but recommended for DTAA claims.

Video KYC is available for UAE, US, and UK NRIs following IFSCA's 2025 guidelines. Takes 15-30 minutes with AI-based face matching.

Account activation: 3-5 business days with video KYC, 1-2 weeks without.

The key operational point: your NRE account relationship doesn't extend to the IBU. You're opening a new account with a separate entity.

Expect separate login credentials and customer service channels.

👉 Tip: Already bank with HDFC, ICICI, or SBI? Ask their NRI desk to connect you with the GIFT City IBU team. Internal referral speeds up the process.

3. The Regulator Is Different (and That Changes Everything)

Your NRE FD is regulated by the Reserve Bank of India. Your mutual fund SIP is regulated by SEBI.

GIFT City investments are regulated by IFSCA (International Financial Services Centres Authority), a unified regulator combining the roles of RBI, SEBI, IRDAI and PFRDA within the IFSC zone.

What does this mean operationally? Deposit insurance doesn't apply.

GIFT City FDs are not covered by DICGC (Source: ICICI Bank GIFT City T\&Cs). The banks are the same entities, but their IBU branches fall outside domestic insurance. Read our safe investment guide.

Grievance redressal follows IFSCA's framework, not the RBI ombudsman. GIFT City mutual funds are approved by IFSCA, not SEBI. GIFT City AIFs have lower minimums ($75,000) because IFSCA sets its own thresholds.

For NRIs, this regulatory difference is actually an advantage.

IFSCA was designed for international transactions, with faster, more digital-first processes built for non-residents.

4. Getting Money Back Works Differently

This is where the operational gap is widest.

From INR investments: NRE accounts allow unlimited repatriation, but money arrives as converted foreign currency (bank spread applies).

NRO repatriation is capped at USD 1 million per year and requires a CA certificate plus Forms 15CA/15CB for amounts above ₹5 lakh. Process: 7-15 business days plus CA fees (₹5,000-15,000).

From GIFT City: Your money is already in USD. At maturity, the bank wires USD back via SWIFT. No conversion.

No Forms 15CA/15CB. No annual cap. No CA certificate. Process: 1-3 business days. Same simplicity applies to GIFT City mutual fund redemptions.

👉 Tip: If you're investing for a future dollar-denominated expense (children's education, property abroad, retirement outside India), GIFT City's repatriation simplicity makes it the more practical choice. Read our guide on investing dirhams in India.

5. What Happens When Your Status Changes

NRIs don't stay NRIs forever. Status changes trigger different operational consequences for USD vs INR investments.

If you return to India, your NRE account must be redesignated as a resident or RFC account.

NRE FDs can continue till maturity, but new deposits follow resident rules. Tax-free interest becomes taxable.

Your GIFT City investments continue without selling or closing accounts. But the tax treatment flips.

As a non-resident, GIFT City income was tax-exempt.

Once resident, it's taxable under normal slabs. The RNOR status provides a 2-3 year transition where foreign income may remain exempt.

If you move between countries (UAE to UK), both NRE and GIFT City investments continue.

But the applicable DTAA changes from India-UAE to India-UK, significantly impacting net returns since the UK taxes worldwide income.

👉 Tip: Planning to return to India? Consider timing GIFT City investments to mature during your RNOR window for maximum tax efficiency. Read our financial checklist for returning NRIs.

The Process Matters as Much as the Return

Most NRIs obsess over rates.

But the operational mechanics of how money moves, how accounts open, who regulates your deposit, how repatriation works, and what happens when life changes decide whether those returns actually reach you.

Thousands of NRIs in our WhatsApp community have navigated both systems.

They share real experiences, flag bank-specific issues, and help each other avoid operational surprises. Join them.

The Belong app makes the USD side operationally simple. Single KYC. Single wallet.

Compare FD rates across banks. Access GIFT City mutual funds, AIFs, and track GIFT Nifty in one place. The process is the product.

Disclaimer: For informational purposes only. Not financial, tax or legal advice. Consult qualified advisors before investing. Regulations and processes subject to change. Information current as of February 2026.