A common question that is constantly heard on the lips of every NRI is how can they invest in Fixed Deposits (FDs) in the India?
It is not a surprise to hear that question as Fixed Deposit have been for long the favourite choice of investment in the country.
With many people from the country now working and residing outside the country, Non-Resident External (NRE) deposits have become quite popular.
But what are NRE fixed deposits? NRE fixed deposits are similar to regular term deposits with NRIs using NRE accounts to open fixed deposits. The accounts can be opened by all NRIs and are virtually tax-free.
The Interest rates offered on NRE fixed deposit by banks for deposits less than Rs.2 crore are as follows: - Last Updated on 20 Oct 2021
|Bank||Interest rate range per annum for amount less than Rs.2 crore|
|1 year||More than 1 year to 3 years||More than 3 years to 5 years||More than 5 years to 10 years|
|Union Bank of India||5.25%||5.30% - 5.50%||5.55%||5.60%|
|Punjab National Bank||5.20%||5.20%||5.30%||5.30%|
|Oriental Bank of Commerce||5.50%||5.50%||5.40%||5.40%|
|Punjab and Sind Bank||5.25%||5.25%||5.25%||N/A|
|Canara Bank||5.20%||5.20% - 5.40%||5.50%||5.50%|
|Indian Overseas Bank||5.20%||5.25%||5.25%||5.25%|
|Vijaya Bank||4.90%||5.00% -5.10%||5.25%||5.25%|
|Central Bank of India||4.90%||4.90%||5.00%||5.00%|
|Allahabad Bank||6.45%||6.35% -6,45%||6.25%||6.25%|
|Syndicate Bank||5.20%||5.20% -5.40%||5.50%||5.50%|
|Bank of India||5.25%||5.25% - 5.30%||5.30%||5.30%|
|Bank of Baroda||4.90%||5.00% - 5.10%||5.25%||5.25%|
|Dena Bank||4.90%||5.00% - 5.10%||5.25%||5.25%|
|State Bank of India||5.00%||5.00% - 5.10||5.30%||5.40%|
|Bank of Maharashtra||4.90%||4.90%||4.90%||4.90%|
|Lakshmi Vilas Bank||3.15%||3.35%||4.35%||4.35%|
|Karur Vysya Bank||5.50%||5.50%||5.65%||5.75%|
|Yes Bank||6.25%||6.25% -6.50%||6.75%||6.75%|
|South Indian Bank||5.40%||5.40%||5.50%||5.50%|
|City Union Bank||5.50%||5.75%||5.50%||5.25%|
|Federal Bank||5.10%||5.10% - 5.50%||5.35%||5.50%|
|Tamilnad Merchantile Bank||5.75%||5.65%||5.50%||5.50%|
|Kotak Mahindra Bank||4.50%||4.50% to 5.00%||5.10% - 5.25%||5.30%|
|ICICI Bank||4.90%||4.90% to 5.15%||5.35%||5.50%|
|Karnataka Bank||5.30%||5.30% to 5.55%||5.55%||5.70%|
|Dhanlaxmi Bank||5.25%||5.25% - 5.40%||5.50%||5.60%|
|Thane Janata Sahakari Bank||5.00%||5.50%||5.60%||5.75%|
|Shamrao Vithal Co-operative Bank||5.60%||5.60% - 5.75%||5.75%||N/A|
|Zoroastrian Co-operative Bank||5.00%||5.00%||4.75%||4.75%|
|Saraswat Co-operative Bank||5.10%||5.25%||5.25%||N/A|
|Abhyudaya Co-operative Bank||5.75%||6.25%||6.00%||6.00%|
|Bombay Mercantile Co-operative Bank||4.90%||4.90% - 5.10%||5.30% -5.40%||N/A|
To open an NRE fixed deposits, one needs to fulfil the following criteria:
To open an NRE deposit, an individual needs to submit documents like:
NRE deposits are laced with a variety of features. Some of them are mentioned below:
The interest rates offered on a Non-Resident External deposit varies with the duration for which the deposit is opened. The rates offered by various banks can go up to 8% per annum or more.
When an individual opens an NRE fixed deposit, he/she is liable to avail certain benefits. Some of them are as follows:
NRE deposits have certain benefits but they have certain drawbacks as well. One of the biggest drawbacks a senior citizen might face with NRE deposits is that the special interest rate for senior citizens on all other deposits is not applicable on NRE ones.
Given below are some of the differences between NRE and NRO accounts
|Deposits are tax free.||Deposits are not tax free. Any interest earned will lead to adequate TDS being deducted.|
|You can deposit your foreign earnings in Indian denomination in this type of account.||You can deposit your Indian earnings in Indian currency in this type of account.|
|You can easily transfer your principal amount and interest earned from your NRE account.||There is a limit of $1 million before you can transfer your deposits in an NRO account. You will also have to pay the required taxes before the transferring of the amount from your NRO account to another account.|
|Opt for this if you wish to keep your foreign earnings in Indian denomination and wish to keep it liquid.||This account is helpful if you wish to keep your Indian earnings in Indian denomination.|
|You can open this account with a close relative and another NRI only.||You can open this type of account with any resident in India and an NRI.|
If you qualify as a ‘'person resident outside India’' under the exchange control law, then the interest earned on your NRE fixed deposits will be exempt from tax in India.
When you return to India, you can continue to maintain your NRE fixed deposits until they reach maturity.
Yes, you can take a loan against your NRE fixed deposit of up to 90% of your deposit amount.
Yes, both the interest earned as well as the principal amount is fully repatriable.
You can fund an NRE FD account with any currency that is convertible.
Yes, NRE FD is a good investment option as you can get to earn decent returns on your deposits.
IndusInd Bank offers interest rates at 6.50% onwards. However, you must check the rate of interest offered by different banks as well.
Yes, deposits made in an NRE FD account are tax free.
No, you can have only one NRE account in your name.
No, TDS is not deducted on NRE FD interest.
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