This Article was fact checked and last updated for accuracy on December 3, 2024 by Mani Karthik
A non-resident Indian can open a savings, current, recurring or fixed deposit with a bank. The interest rates as well as the tenure for these accounts vary from bank to bank. Now NRI fixed deposit allows the customer to deposit Indian or foreign currency for a stipulated tenure. In comparison to savings account this NRI fixed can give you higher interest rates and hence better savings.
Features
A non-resident Indian with Indian nationality or of Indian origin can open a NRE fixed deposit.
It can be started individually or jointly with other NRI’s.
Certain NRE FD’s are not taxable.
Some banks also offer loans against the NRE FD.
These fixed deposits earn higher rate of interest as compared to savings account.
You can withdraw the fixed deposit before the stipulated period but you will not be eligible for the interest. There will also be a penalty of 0.5-1% for pre mature withdrawal.
Eligibility
A non-resident Indian with Indian nationality or of Indian origin is eligible for an NRE fixed deposit account.
Documents
Recent Passport size photograph
Xerox of passport including the id proof, address proof.
Visa copy or Work permit copy
Proof of overseas and Indian address
NRE Fixed deposit rates comparison (October 2015)
| Bank/Term | 12 -13 months (Less than 10 million) | 1 -5 years (Less than 10 million) | 5-10 years (Less than 10 million) | Penalty |
| Axis Bank | 7.65% | 7.25% | 7.25% | 0% |
| ICICI Bank | 7.75% | 7.75% | 7.5% | 1% |
| SBI | 7.25% | 7.5% | 7.0% | 0.5% |
| PNB | 7.5% | 7.25% | 7.25% | 1% |
| YES | 7.9% | 7.75% | 7.75% | 0% |
| HDFC | 7.9% | 7.65% | 7.5% | 0% |
| HSBC | 6.25% | 7.25% | 7.25% | NA |
| IDBI | 7.25% | 7.5% | 7.5% | 0% |
| Bank of Baroda | 7.3% | 7.3% | 7.3% | 0% |
| ING Vysya | 7.9% | 7.5% | 7.25% | 1% |
Summary
Fixed deposits generally generate higher interest as compared to savings account. The NRO account is susceptible to have tax deduction on its interest but the NRE account does not have tax deduction so it’s beneficial to invest your savings in this. The fluctuation in foreign currency can prove to be a loss for the non-resident Indian. The low rate of interest in saving account will not compensate for this too. The NRE FD have higher interest and the money stands secured for a fixed period. But if you withdraw the money before completion of the term you are likely to lose your interests it’s always beneficial to plan your funds in such a way that you have liquid cash to meet immediate expenses and an amount put aside as fixed deposit which needn’t be withdrawn.
The NRE account gives you the benefit of conversion of Indian rupees into foreign currency as and when required. So even if the money is locked in for a long time you can always convert it back into foreign currency when the fluctuation is favoring you.
Many banks offer high interest for NRE FD for a short duration up to 1 year. Eg: ICICI, Axis, YES, HDFC,ING Vysya. They are ready to pay higher rates for your fixed deposits in a short time period. This also proves to be beneficial for the customer as they can withdraw the funds at the end of short time frame. But again banks interest rates fluctuates every year. So if your idea is to make money it is better to invest for long periods when the bank’s interest rates are high. But if you wish liquidity in your funds go for short duration fixed deposits.
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