• NRO Fixed Deposit Rates

    One of the most popular in investment options available for customer, Fixed Deposits are highly procured due to their relative safety and reliability in a high risk economic environment. There are numerous reasons as to why fixed deposits are widely procured. Some of these include -

    • Guaranteed returns although they are comparatively lower than other investment options.
    • Compounded interest decides the returns offered.
    • The risk constituted by fixed deposits are lower than most and due to this nature of it, returns are also quite low.

    Individuals must also realise that, although fixed deposits come with tax benefits, the interest applicable on that is not tax free. There are fixed deposit schemes that allow customers to withdraw prior to maturity but most don’t. Even if withdrawal prior to maturity is allowed, interest rate applicable is low. If customers withdraw prior to maturity in cases where it is not allowed, a penalty will be applicable.

    Interest rates on fixed deposits do not change, even if the market is in a good shape which again is not the best situation for investors.

    NRO Fixed Deposit

    NRO or Non Resident Ordinary Accounts is meant for NRIs or Non Resident Indians to keep funds that are also existent prior to becoming a Non Resident Indian and also the funds earned by them within the country such as rent, Indian Salary, dividend and so on. Interest earned is taxable under the Income Tax Act of India. This account offers numerous benefits as well.

    The interest rate applicable varies from bank to bank. The table below illustrates the rates of some popular banks. Senior citizens receive additional interest.

    NRO FD Interest rates for a Deposit of less than Rs. 1 crore

    Name of the Bank NRO Interest Rates Senior Citizen NRO Interest Rates
    Allahabad Bank 4.50% to 7.25% 4.50% to 7.25%
    Axis Bank 3.50% to 7.25% 3.50% to 7.25%
    Bank of Baroda 4.50% to 7.30% 4.50% to 7.30%
    Bank of India 4% 4%
    Bank of Maharashtra 4.50% to 7.25% 5.00% to 7.75%
    Bharatiya Mahila Bank 5.00% to 7.25% 5.50% to 7.75%
    Canara Bank 5.25% to 7.25% 5.75% to 7.75%
    CitiBank 3.00% to 6.50% N.A
    DBS Bank 5% to 7.2% 5% to 7.2%
    Dena Bank 4.5% to 7.25% 4.5% to 7.25%
    Deutsche Bank 6.00% to 8.50% 6.50% to 8.75%
    Dhanalakshmi Bank 5.00% to 7.10% 5.50% to 7.60%
    HDFC Bank 3.50% to 7.25% 3.50% to 7.25%
    ICICI Bank 6.00% to 7.35% N.A
    IDBI Bank 4% N.A
    Indian Bank 4% 4%
    Indian Overseas Bank 4% 4%
    IndusInd Bank 4.00% to 7.25% N.A
    Jammu and Kashmir Bank 5.00% to 7.35% N.A
    Karnataka Bank 4% 4%
    Kotak Mahindra Bank 4.00% to 7.25% 4.50% to 7.75%
    Lakshmi Vilas Bank 5.00% to 7.80% 5.00% to 7.80%
    Oriental Bank of Commerce 4.00% to 7.25% N.A
    Punjab and Sind Bank 3.75% to 7.00% 3.75% to 7.00%
    Punjab National Bank 4.25% to 7.00% 4.25% to 7.00%
    Saraswat Bank 4.00% to 7.65% 4.00% to 7.85%
    South Indian Bank 4.00% to 7.30% 4.00% to 7.30%
    State Bank of Bikaner and Jaipur 5.50% to 7.00% 5.50% to 7.50%
    State Bank of Hyderabad 6.00% to 7.50% N.A
    State Bank of India 5.50% to 7.00% N.A
    State Bank of Mysore 5.75% to 7.50% N.A
    State Bank of Travancore 5.25% to 7.00% 5.25% to 7.40%
    Syndicate Bank 5.50% to 6.75% 5.50% to 6.75%
    Tamilnad Mercantile Bank 5.80% to 7.70% N.A
    Union Bank of India 5.25% to 7.25% 5.25% to 7.25%
    Vijaya Bank 4.00% to 7.00% 4.00% to 7.00%
    Yes Bank 5.50% to 7.50% N.A

    Documents Needed to Procure Fixed Deposit

    In order to open a Fixed Deposit account, individuals will need to provide the following -

    • Identity Proof such as Passport, PAN Card, etc.
    • Address Proof such as Aadhaar card, Voter ID, Utility Bills, etc.

    Other documents, if necessary, will be mentioned by the bank authorities.

    There are different types of Fixed Deposits available to customers based on the features. One such popular option is NRO Fixed Deposit.

    Features of NRO Fixed Deposit

    • This account is meant for Non-Resident Indians who receive regular income from sources in India.
    • The interest earned on this account is taxable under the Income Tax Act of 1961.
    • Repatriation of principal investment is not offered but interest earned can be transferred to a foreign account.
    • NRO account holders can open a joint account with their relatives who live in India and are Indian citizens.
    • NRO account is maintained in Indian currency and cannot be repatriated or converted to foreign currency.
    • Customers can earn a higher interest amount and returns on rupee income as compared to savings or current account offers.
    • Rs.1 lakh is the minimum amount that needs to be deposited in an NRO account.
    • NRO deposit account holds rate in Indian currency and interest rates applicable on this account varies based on every bank.

    Tax Applicable on NRO Fixed Deposit

    NRO Fixed Deposits are not tax free, in the sense that, although there will not be tax charged on the principal, the interest earned on it will be subject to tax as per the Income Tax Act of 1961. Tax applicable on NRO account is quite high at 30% along with applicable surcharge and cess.

    In case the interest earned is over Rs. 1 million, then an additional surcharge of 10% will be added.

    NRO Fixed Deposit vs NRE Fixed Deposit

    NRO and NRE Accounts are two popular accounts that NRIs or Non Resident Indians can open within India. NRE stands for Non-Resident External account and this is another account that can be procured by Non Resident Indians in order to consolidate their finances within the country.

    Although both of them are used by Non Resident Indians, there are quite a number of differences between the two accounts.

    NRE accounts only accept money in foreign currency whereas NRO accepts deposits in Indian currency. Another difference is that, while interest availed on NRO accounts is subject to taxes, NRE accounts are tax free. The interest charged on both are more or less same. NRE accounts are completely repatriable whereas only the interest earned on NRO accounts is repatriable. Another stark difference is that, NRE account holders can hold the account with other NRIs only whereas NRO account holders can hold a joint account with other NRIs and resident Indians as well.

    NRO accounts are highly advantageous to NRIs who have accounts or means through which they can manage their income received from within the country. There are a number of advantages and disadvantages that comes with this account. Individuals will need to open an account that is beneficial to them. Interest rates applicable on NRO accounts vary from bank to bank and they are also subject to change. It is advisable for individuals to contact the bank directly to confirm rates prior to opening an NRO account.

    Updated on August ‘16

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