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NRE FD Rates

NRE FD

Last Updated 26th Jul 2021

  • NRE FD allows NRIs to save their foreign earnings in India.
  • Having an NRE account is a must for holding NRE fixed deposits.
  • NRE FD offers flexible tenures that can range anywhere from 1 year to 10 years.
  • No tax is deducted from the principal or interest gained in NRE FDs.
  • NRE FD provides the facilities of premature closing and auto-renewal.
  • The interest rates may range from 3.40% to 6.70% depending on the tenure and NRE FD offering banks.
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What is NRE Fixed Deposit?

The regulation of the Foreign Exchange Management Act or FEMA does not allow Non-resident Indians or NRIs to operate a regular account in India. Hence, Non-resident External or NRE accounts have been designed for NRIs who are willing to invest in India. With the NRE accounts, NRIs can invest in savings accounts, Fixed Deposits and Recurring Deposits. Investment in NREs is made in foreign currencies and then transmitted to Indian currency.

Now coming to NRE fixed deposits, they function in the same way as the regular fixed deposits. You must open an NRE account before investing in fixed deposits. Many banks in India including HDFC, State Bank of India and Axis Bank provide the facility of NRE FDs. Before you start investing in any NRE FD, let’s have a detailed discussion on the eligibility, interest rates and other benefits of the NRE FDs.

Best NRE FD Rates

Different banks offer different interest rates for the NRE FDs interest rates vary depending on the tenures as well. To find out which is the best bank for NRI account, let’s go through the interest rates offered by various banks for various tenures.

Bank Rate of Interest
India Post Office 5.50% - 6.70%
PNB Housing Finance 5.90% - 6.70%
HDFC 6.20% - 6.65%
Bajaj Finance 5.65% - 6.50%
IndusInd Bank 2.75% - 6.50%
DCB Bank 4.50% - 6.50%
Yes Bank 3.25% - 6.50%
ICICI Home Finance 4.30% - 6.45%
RBL Bank 3.25% - 6.30%
IDFC First Bank 2.75% - 6.00%
Lakshmi Vilas Bank 2.50% - 6.00%
Karur Vysya Bank 3.25% - 5.75%
LIC Housing Finance 5.25% - 5.75%
Axis Bank 2.50% - 5.75%
Karnataka Bank 3.40% - 5.70%

As stated in the table, India Post Office offers the highest rates. On the other hand, the NRE FD rates offered by Karnataka Bank are the lowest.

Although Axis, HDFC, ICICI and SBI NRE FD rates are lower than few other banks, they are still popular choices.

Small Finance Bank NRE FD Rates

The interest rates for Small Finance Bank NRE FD rates can range from 3.50 % to 6.75%. To establish which bank is the best bank for NRE account and FD, below is the list of interest rates that small finance banks provide.

Small Finance Bank Rate of Interest
Ujjivan Small Finance Bank 3.05% - 6.75%
Jana Small Finance Bank 2.50% - 6.75%
Equitas Small Finance Bank 3.50% - 6.50%
ESAF Small Finance Bank 4.00% - 6.50%
AU Small Finance Bank 3.50% - 6.25%

Benefits of an NRE FD Account

The NRE FD accounts provide plenty of benefits which are mentioned below.

  • Investment in the FD account can be made using Indian currencies.
  • The interest rates offered on NRE fixed deposit is higher in contrast to regular savings accounts.
  • You can choose any tenure ranging from 1 year to 10 years.
  • If you are in urgent need of funds, premature closing is allowed that can be helpful during any financial emergencies.
  • Selected banks also offer the facility of availing overdrafts up to 90%.
  • You can also avail loan against NRE fixed deposits.
  • If you choose auto-renewal it will re-invest the FD amount automatically, after maturity.
  • Some banks also provide the facility of joint NRE FD accounts.
  • You can also nominate someone from your family for your FD account.
  • There is a tax exemption under 80C section of Indian Income Tax Act on the principal amount and as well as on the accumulated interest.
  • The deposit done by you is insured up to a certain sum by the Deposit Insurance and Credit Guarantee Corporation.

Documents required to open NRE deposits

You will be required to submit the following list of documents while applying for an NRE deposit account.

  • Passport
  • Address proof
  • Work Visa

Eligibility criteria for NRE fixed deposits

The following are the eligibility criteria for opening and operating NRE fixed deposits in India.

  • The applicant must be a NRE or Non-Resident India
  • The applicant also needs to be a POI or Person of Indian Origin
  • Lastly, the depositor must be a NRE account holder.

Difference between NRI and NRE

Both NRI or NRO and NRE accounts cater to Non-Resident Indians or NRIs and Person of Indian Origin or POI. However, there are differences in their natures and features. Whereas NRE accounts are for holding foreign earnings in Indian banking facilities, NRI or NRO accounts are for parking incomes earned in India in Indian banking facilities.

Other differences between an NRI or NRO account and NRE account are mentioned below.

Parameter NRI NRE
Transferability NRI funds can be transferred only after the applicable taxes are paid. NRE funds including both principal amount and gained interest can be transferred without any charge.
Joint account facility An NRI can hold an NRE account with another NRI and with any Indian resident as well. An NRI can hold an NRE account only with another NRI.
Taxation NRI accounts are subject to TDS and other taxes. Both principal and accumulated interest in NRI accounts are completely tax-free.
Deposit The deposit can be made in foreign currency. However, withdrawal is made in Indian currency. The deposit can be made in both foreign as well as Indian currency. Whereas, the withdrawal is made only in Indian currency.

FAQs

Is NRE FD a good investment?

NRE FD is a good investment for NRIs earning in foreign currencies since both the principal amount and accrued interest are exempt from tax. Moreover, the funds offer the facility of overdrafts, flexible tenure, high transferability and joint accounts.

Which bank gives the highest interest rate on NRE FD?

The interest rate on NRE FD depends on the tenure selected by you. For instance, India Post Office offers the highest interest rates, i.e., 6.70%.

Can we have 2 NRE accounts?

Yes, you can have two or more NRE accounts at different banks. However, in case you want to have more than one NRE account at the same bank, the account type has to be different. For example, instead of having two NRE accounts, you can opt for an NRE account and an NRO account.

Is NRE FD tax-free?

Yes, the principal amount you invest and the interest you earn on the principal amount both are tax-free.

Is TDS deducted on NRE FD interest?

Interest accrued on NRE FDs is completely tax-free. Hence, no TDS is deducted on NRE FD interest. 


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