Fixed deposits are one of the most preferred investment options in India because of the nominal risk and guaranteed returns. Like resident Indians, Non-Resident Indians (NRIs) are also investing in NRI (NRE, NRO & FCNR) fixed deposits to save and manage their foreign income in India. NRE fixed deposits are similar to regular term deposits, opened using NRE accounts. All NRIs and PIOs can invest in NRE FDs in India. Indian banks and NBFCs (Non-Banking Financial Companies) offer attractive NRE Fixed Deposit rates, which are virtually tax-free.
NRE Fixed Deposit Rates
Interest rates offered on NRE fixed deposits by top Indian banks for amount less than Rs. 2 crore are as follows:
|Bank||1 year to less than 2 years||2 years to less than 3 years||3 years to less than 5 years||More than 5 years to 10 years|
|State Bank of India||5.00%||5.10%||5.30%||5.40%|
|Punjab National Bank||5.10%||5.10%||5.25%||5.25%|
|ICICI Bank||4.90% to 5.00%||5.15%||5.35%||5.50%|
|Axis Bank||5.10%||5.10% to 5.25%||5.40%||5.75%|
|Bank of Baroda||4.95%||5.05%||5.35%||5.35%|
|Kotak Mahindra Bank||4.00% to 4.25%||4.50%||4.60% to 4.75%||5.00%|
|Bank of India||5.25%||5.30%||5.30%||5.30%|
|Union Bank of India||5.25% to 5.30%||5.50%||5.55%||5.60%|
|Central Bank of India||4.90%||5.00%||5.10%||5.10%|
|Indian Overseas Bank||5.20%||5.25%||5.25%||5.25%|
|Oriental Bank of Commerce||5.25%||5.25%||5.30%||5.30%|
- For senior citizens additional interest rate of 0.50% is offered
- Note: Interest rates are subject to periodic changes without prior intimation
Eligibility criteria for NRE fixed deposits
One needs to meet the following eligibility criteria to open an NRE fixed deposit account:
- All NRIs (Non-Resident Indians) and PIOs (Persons of Indian Origin) can apply for NRE fixed deposit accounts.
- They should have an NRE account with any bank.
Documents required to open an NRE account
To open an NRE FD account, you will need to submit the following documents;
- Valid ID proof
- Valid work visa/ permit
Features of NRE fixed deposit
Here are the key features of NRE fixed deposit:
- NRIs can park the deposit in Indian rupees (INR).
- Flexible tenure ranging from 1 year to 10 years.
- Auto-renewal facilities are offered by banks once the FD matures.
- Most banks offer loans against NRE deposits.
- NRIs can get up to 90% overdraft on NRE deposits.
- NRE fixed deposits can be held jointly.
- Tax-saver FDs are available, which allow NRIs to claim tax benefits in India under Section 80C of the IT Act.
NRE fixed deposit benefits
You can enjoy the following benefits by investing in NRE FDs:
- NRIs can open fixed deposit accounts in India and earn attractive interest rates.
- NRE fixed deposit interest rates are tax-free in India.
- In case of unforeseen events, depositors can withdraw funds prematurely.
- You can easily transfer the principal amount and interest earned from your NRE account.
- Nomination facility is available for depositors.
NRE fixed deposit rate comparison
NRE fixed deposit rates vary from bank to bank and term to term. For example, Axis Bank NRE FD rates range from 5.10% to 5.75% per annum, whereas Yes Bank NRE FD rates from 6.00% to 6.50% per annum. However, some banks have a lock-in period and charge a premature withdrawal penalty. So, you must compare FD rates and other terms before finalizing an NRE FD.
Due to a lengthy process and lots of documents required to apply for NRE FD accounts, NRIs living away from India may face several challenges. At SBNRI, we understand this struggle. You can download SBNRI App to apply for an NRE Fixed Deposit account with nominal documentation with a smooth procedure.
The interest on NRE FD and/ or NRE savings account is not taxable under the provision of Section 10(4) of the Income Tax Act 1961 for individuals who qualify as a ‘Person resident outside India’ as per FEMA (Foreign Exchange Management Act).
You can deposit any convertible currency in an NRE FD account.
Yes, you can continue to maintain your NRE FD until its maturity even after you return to India.
As NRE FDs come with a host of benefits, it is an ideal investment option for NRIs to earn decent returns on their deposits.
NRE fixed deposit rates vary from bank to bank based on the tenure of a fixed deposit. As of now, Yes Bank and IndusInd Bank are offering the highest NRE FD rate up to 6.50% per annum.
Yes, many banks offer a loan against an NRE fixed deposit of up to 90% of the deposit amount.
Yes, both the principal and interest earned on an NRE FD are fully repatriable.
No, deposits made in an NRE fixed deposit are not taxable in India.
TDS is not deducted on interest earned from NRE FDs.