If an NRI is on the lookout to invest his/her earnings abroad by way of employment, business, or investments, the best option is an NRE Fixed Deposit Account. It is a safe and lucrative way of getting high returns. NRE Fixed Deposits are offered competitive interest rates with tax advantages and convenience in liquidity.
What is an NRE FD Account?
Non-Resident External Fixed Deposit Accounts are specially designed for Non-Resident Indians. The account can be opened by a Non-Resident Indian of Indian Origin or Indian Nationality. These accounts are opened for a predetermined period with easy liquidity options. With competitive interest rates and repatriable options, this account is ideal for NRIs who intend to invest their foreign earnings in India.
Benefits & Features of NRE Fixed Deposit Account
The following features and benefits make investment in NRE Fixed Deposit a lucrative option for NRIs.
- NRIs and Persons of Indian Origin are eligible to open an NRE Fixed Deposit Account
- NRE Fixed Deposits are maintained in Indian Rupees but the withdrawal can be made in foreign currency only.
- The deposits into the NRE FD account will be foreign currency. The foreign currency will be converted into Indian Rupees at the rate prevailing at the time of deposit.
- The main advantage of an NRE Fixed Deposit account is that the balances in the account (principal and interest) are freely repatriable in the same currency as it was deposited without any restrictions.
- The tenure of the deposit ranges from 1 year to 10 years
- The fixed deposit rate NRE accounts are competitive and generally higher than savings accounts.
- NRE Fixed Deposits can be opened jointly with other NRIs.
- Premature withdrawal of the deposit is permitted subject to withdrawal penalties.
- Auto-renewal facility is provided for the NRE FD accounts and will be reinvested automatically on maturity for the same tenure if no specific instructions are received from the depositor.
- Nomination facilities are provided for the NRE Fixed Deposit accounts.
- NRE Account Fixed Deposit income tax is exempted in India
Best NRE FD Interest Rate in 2023
The following are the best NRE Account Fixed Deposit Rates
Name of the Bank | NRE Account Fixed Deposit Rates |
SBI | 6.80% to 7.10% p.a. |
PNB | 6.50% to 7.25% p.a. |
Union Bank | 6.30% to 7% p.a. |
HDFC | 6.60% to 7.20% p.a. |
ICICI Bank | 6.70% to 7.10% p.a. |
Yes Bank | 7% to 7.50% p.a. |
Canara Bank | 6.90% to 7.25% p.a. |
IDFC First Bank | 7% to 7.50% p.a. |
IndusInd Bank | 7.25% to 7.85% p.a. |
Why Choose an NRE Fixed Deposit Account in 2023?
The primary reasons for choosing an NRE Fixed Deposit Account are:
- It is a lucrative way of investing foreign earnings in India
- Competitive NRE Account Fixed Deposit Rates make it an ideal avenue for capital appreciation.
- The income on NRE Fixed Deposits is not taxable in India
- Premature withdrawal facility gives easy access to money in times of need.
- Can avail of a loan on the deposit to the extent of 90% in case of financial emergencies.
- Can be held in joint names with other NRIs.
- A nomination facility is available.
How to Apply For an NRE FD Account Online?
To apply for an NRE FD account online you should
- Visit the website of the bank
- Click on the NRI Banking option on the dashboard
- Under the ‘Accounts’ option choose Deposits.
- Under the ‘Deposits’ option choose the ‘NRE FD Deposit’ option
- Click on the ‘Apply Now’ button
- Fill out the application with your basic information on the next page.
- Tap on the ‘Submit’ button
- A representative from the bank will contact you and fix up a meeting.
- The representative will come to your doorstep for necessary paperwork and account opening assistance.
If you already have an NRE account with the Bank, you can apply for an NRE FD online through Internet Banking.
How to apply for an NRE FD Account Offline?
To apply for an NRE FD Account offline
- Go to the nearest bank branch
- Collect the form for opening an NRE FD Account.
- Complete the form and submit it along with the required documents.
- The bank official after verifying the documents and the details in the application form will open the NRE FD Account.
- The deposit amount can be by way of foreign inward remittance or transfer from another FCNR or NRE Account of the depositor
NRE FD Account Service Charges in 2023
There are no charges collected for opening and maintaining an NRE FD Account. The service charges for the account will be only by way of penalty for premature withdrawal of the deposit. The premature withdrawal charges collected by top banks are given below:
Name of the Bank | Premature Withdrawal Penalty |
ICICI Bank | 0.50% to 1.50% depending on the period for which the deposit was active and the deposit amount |
Kotak Mahindra Bank | No interest will be paid if closed within 1 year. 1% penalty if closed after 1 year |
SBI | 0.50% to 1% depending on the amount. No interest will be paid if closed before 1 year |
Canara Bank | 1% |
IndusInd Bank | 0.50% to 1% |
Union Bank | No interest will be paid if closed before 1 year. No penalty for premature closure |
PNB | 1% |
Yes Bank | 0.50% to 0.75% |
Documents Required to Apply for NRE FD Account
The documents required for an NRE FD Account are:
- Address Proof in India like Aadhar Card, Voter’s ID Card, Driving Licence, etc. (not mandatory)
- Address proof of the country of residence
The address mentioned in the application form and the one in the address proof should be the same.
- PAN
- NRI Status Proof
- Residence Visa
- Work/Residence permit
- PIO or OCI card (should be valid)
- Signed and filled in PIO declaration for PIOs
- NRI Seafarers are to produce the current work contract and copy of CDC with disembarkation stamp on the last pate & FEMa declaration
- 2 Passport size photograph
- The photocopies of the documents have to be attested by
- Competent authorities of overseas branches of scheduled banks in India
- Branches of Overseas banks having a relationship with Indian Banks
- Court Magistrate
- Judge
- Consulate General/Indian Embassy in the country of residence
Difference Between NRE FD Account & NRO FD Account
The major differences between NRE FD and NRO FD accounts are:
NRE FD Account | NRO FD Account |
The deposit will be maintained in Indian Rupees | The deposit will be maintained in Indian Rupees |
Withdrawal in foreign currency | Withdrawal in Indian Rupees |
Prone to exchange fluctuation risk | Not prone to exchange fluctuation risk |
The deposit can be by way of transfer from other NRE accounts or foreign inward remittance | The deposits by way of income from investments made in India |
Both Principal and Interest repatriable | Only interest is repatriable fully. The principal is repatriable with restrictions. |
Interest on NRE FD is tax-free in India | 30% tax for interest on deposit |
Loan can be availed in Indian Rupees | Loan against deposit permitted |
Premature withdrawal permitted | Premature withdrawal permitted |
Can be opened jointly with other NRIs | Can be opened jointly with other NRIs or Resident Indian family member |
NRE Fixed Deposit Account FAQ’s:-
NRIs, Persons of Indian Origin, and Overseas Citizens in India can open NRE FD Deposit accounts.
No. The entire principal and interest in the NRE FD deposit can be repatriated.
The tenure of NRE FD deposits is between 1 year to 10 years
Premature withdrawal of NRE FD Deposits is permitted subject to conditions. No interest will be paid if the deposit is withdrawn before completing 1 year. If withdrawn after 1 year, the interest paid will be 1% lower than the contracted interest rate or the rate prevailing at the time of closure whichever is lesser. Also, a penalty ranging from 0.50% to 1% as per the policy of respective banks will be collected.
No. NRE FD Deposits can be opened jointly with other NRIs only.