Due to lower risk than other financial instruments and reliability in a high risk economic environment, fixed deposits continue to be one of the most popular investment options among the common public. Guaranteed returns, compound rates and relative safety are other reasons why fixed deposits are widely procured not only by resident Indians but NRIs (Non-Resident Indians) as well. Fixed deposit interest rates don’t change even if the market is not in a good shape. In this article, we will explore the current NRO fixed deposit rates 2021 and other features.
Also Read: NRE Fixed Deposit Rates 2021
What is NRO Fixed Deposit?
Non-Resident Indians (NRIs) can use NRO or Non-Resident Ordinary accounts to park the funds they had before becoming an NRI and also their Indian income such as rent, dividends, Indian salary etc. Interest earned on NRO fixed deposit accounts is taxable in India under the Income Tax Act of India.
While some NRO fixed deposits can be withdrawn prior to maturity, most of the FDs come with a lock-in period. If users break the FD prior to maturity, some schemes offer low interest, where premature withdrawal is allowed. Where premature withdrawal is not allowed, a penalty will be applicable.
NRO fixed deposit rates by top banks
NRO fixed deposit rates vary from bank to bank and senior citizens get additional interest.
Here are NRO FD rates for a deposit of less than Rs. 1 crore offered by popular Indian banks including ICICI NRO FD rates, HDFC NRO FD rates, SBI NRO FD rates, etc.
|Name of the bank||NRO FD rates||NRO FD rates for senior citizen|
|State Bank of India||2.90% to 5.40%||3.40% to 6.20%|
|ICICI Bank||2.75% to 5.50%||3.25% to 6.00%|
|HDFC Bank||2.75% to 5.50%||3.25% to 6.25%|
|Axis Bank||2.50% to 5.75%||3.50% to 7.25%|
|Kotak Mahindra Bank||2.75% to 4.50%||2.75% to 4.50%|
|Punjab National Bank||3.00% to 5.30%||3.75% to 6.05%|
|IndusInd Bank||3.00% to 5.50%||3.50% to 6.00%|
|Bank of Baroda||2.90% to 5.30%||4.50% to 7.30%|
|Yes Bank||5.00% to 7.00%||N/A|
|Bank of India||4.00% to 5.90%||4.00% to 5.90%|
|Bank of Maharashtra||3.00% to 5.00%||3.00% to 5.50%|
|Canara Bank||3.00% to 5.30%||3.00% to 5.80%|
|Citibank||2.75% to 3.90%||N/A|
|DBS Bank||3.00% to 5.50%||3.00% to 5.50%|
|Dena Bank||2.90% to 5.30%||3.40% to 6.50%|
|Deutsche Bank||2.00% to 6.50%||2.00% to 6.50%|
|Dhanalakshmi Bank||3.50% to 5.80%||3.50% to 6.30%|
|IDBI Bank||3.00% to 5.570%||3.00% to 5.57%|
|Indian Overseas Bank||3.50% to 5.45%||4.00% to 5.95%|
|Jammu and Kashmir Bank||5.00% to 7.35%||N/A|
|Karnataka Bank||3.50% to 5.65%||3.90% to 6.05%|
|Lakshmi Vilas Bank||3.75% to 6.10%||3.75% to 6.60%|
|Punjab and Sind Bank||3.50% to 5.50%||4.00% to 6.00%|
|Saraswat Bank||3.25% to 5.85%||3.25% to 6.35%|
|South Indian Bank||3.50% to 5.70%||4.00% to 6.20%|
|Tamilnad Mercantile Bank||3.75% to 5.75%||3.75% to 5.75%|
Also Read: What is the minimum tenure of NRO FD?
Features of NRO Fixed Deposit
There are different types of Fixed Deposits available for NRI customers based on features. Here are the key features of NRO fixed deposits.
- NRO FD accounts can be used by NRIs who receive income from sources in India.
- The interest earned on funds deposited in this account is taxable under the Income Tax Act of 1961.
- Interest earned can be repatriated to a foreign account. However, the principal amount can’t be transferred outside Indian.
- NRO account is maintained in Indian rupee (INR) and can’t be repatriated or converted into a foreign currency.
- NRIs can open an NRO account jointly with resident relatives or Indian citizens.
- Interest and returns on NRO fixed deposit accounts are higher as compared to savings or current accounts.
- Minimum amount that can be deposited in an NRO account is Rs. 1 lakh.
- NRO fixed deposit rates vary from bank to bank and term to term.
Documents needed to open NRO FD accounts
Documentation may vary from bank to bank. Individuals need to submit the following basic documents to open an NRO Fixed Deposit account:
- Duly filled NRO FD application form
- Self-attested photographs
- Identity proof: Passport/ PAN card/ Aadhaar card
- Address proof: Aadhaar card/ voter’s ID card/ utility bills (Electricity bill, telephone bill, water bill)
If necessary, other documents will be mentioned by the bank authorities.
Tax applicable on NRO fixed deposit
Generally fixed deposits come with tax benefits, but interest offered on that is not tax free. The principal of NRO fixed deposits is not taxable, but the interest earned on it will be subject to tax as per the Income Tax Act of 1961. The interest earned on NRO fixed deposits is subject to tax deduction at a flat rate of 30% along with applicable surcharge and cess.
Also Read: What is the tax on NRO deposit?
Due to a lengthy process and lots of documents required to apply for NRO 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 NRO Fixed Deposit account with nominal documentation with a smooth procedure.
Yes Bank NRO FD rates range from 5.00% to 7% per annum and Jammu & Kashmir Bank offers interest rates from 5.00% to 7.35% per annum. Before finalizing an FD scheme, you must compare interest rate and other features of NRO fixed deposits offered by multiple banks, such as SBI NRO fixed deposit rates, ICICI NRO fixed deposit rates, HDFC fixed deposit rates, etc.
Principal investment in NRO FDs can’t be repatriated. Only the NRO FD interest can be transferred to a foreign account.
While NRE FD accounts are not taxable, the NRO accounts are taxable at a flat rate of 30%.
NRE FD is meant for NRIs to mainly park funds from foreign countries. NRE FDs are also fully repatriable. NRO deposits, on the other hand, are a good fit if you want to deposit your Indian earnings like rental income, dividends, Indian salary, etc.