Introduction
NRO Fixed Deposits, offered by Indian banks to NRIs, allow them to invest foreign earnings in India in Indian Rupees. These deposits are subject to Indian taxation laws and are ideal for parking income from Indian investments, offering attractive returns. Funds from NRE accounts can also be transferred to NRO accounts, making them a favoured choice for NRIs seeking to grow their wealth in India.
What is an NRO FD Account?
The NRO FD account offers a convenient means of managing your Indian income while pursuing an international career. It allows you to invest income from sources like rent, interest, dividends, or pensions for a set period, yielding higher returns. Indian taxation laws apply to NRO account fixed deposit tax. Joint accounts with a resident Indian under ‘Either or Survivor’ are possible. Premature withdrawal with a penalty is allowed for financial emergencies.
Benefits & Features of NRO Fixed Deposit Account
- NRO Accounts facilitate the deposit of income from Indian sources like rental income, Mutual Fund dividends, and FD interest earnings.
- Funds can be deposited in both Indian Rupees (INR) and foreign currencies, with automatic conversion of foreign currency at prevailing rates to INR.
- There are no restrictions on transferring or repatriating the interest income earned in NRO Accounts.
- NRO Fixed Deposit Accounts can be jointly held with resident Indian family members on a ‘Former or Survivor’ basis.
- NRO Fixed Deposit Accounts earn higher interest rates
- Ideal for saving foreign earnings and managing Indian expenses during visits.
- NRO Fixed Deposits can be used as collateral for loans at lower interest rates in emergencies.
- Joint Accounts enable dependents in India to handle financial obligations.
- NRO FD Accounts allow remittances of up to USD 1 million or equivalent per financial year, alongside other eligible assets.
- Multiple tenure options are available from 7 days to 10 years
- You can opt for auto-renewal of the deposit on maturity.
- Competitive exchange rates on the conversion of foreign currency into Indian Rupees for investment.
- You can avail of the DTAA benefit and get a higher yield post-tax.
Best NRO FD Interest Rate in 2023
The best NRO Account Fixed Deposit Rates are as given below:
Name of the Bank | Interest Rate p.a. |
DBS Bank | 2.50% to 7.50% |
HSBC | 2.85% to 7.25% |
Kotak Mahindra Bank | 4% to 7.25% |
ICICI Bank | 3% to 7.10% |
Canara Bank | 4% to 7.25% |
SBI | 3% to 7.105 |
PNB | 3.50% to 7.25% |
Bank of Baroda | 3% to 7.25% |
Yes Bank | 3.25% to 7.75% |
Axis Bank | 3% to 7.10% |
Why Choose NRO Fixed Deposit Account in 2023?
The reasons to justify your choice to invest in an NRO Fixed Deposit Account are given below:
- These deposits are low-risk investments and a safe option to preserve and get high yields on your hard-earned funds.
- It is a reliable avenue for NRIs to earn high returns on their income by way of rent, dividends, interest, pension, etc., in India.
- Deposits into the account can be made either in Indian Rupees or foreign currencies. Foreign currencies are automatically converted to Indian Rupees.
- The interest rates on NRO FDs are competitive and ensure substantial returns on the investment.
- Opening jointly with resident Indian family members is permitted, allowing access to funds for family members whenever in need.
- A loan can be availed against NRO FDs in case of financial exigencies.
- The interest earned on NRO FDs can be repatriated without any restrictions after paying the applicable tax.
How to Apply For an NRO FD Account Online?
To apply for an NRO FD Account online follow the instructions given below:
- Visit the official website of the bank
- Click on the ‘NRI Banking’ option
- Choose the option ‘Open NRI Account’
- Requests for a callback option will be seen. Click on that.
- The representative of the bank will call you and guide you through the account opening process.
How to Apply For an NRO Fixed Deposit Account Offline?
To open the NRO Fixed Deposit Account offline
- Visit the nearest branch of the bank where you have a savings account
- Get the NRO FD application and fill out the details.
- Submit copies of the required documents along with the application.
- The documents and the application will be verified and the account opened.
- The deposit amount will be debited to the source account mentioned in the application.
- A deposit receipt will be issued which you will have to keep safely for future reference.
NRO FD Account Service Charges in 2023
NRO FD accounts attract premature withdrawal penalties. The penalties specified by different banks are given below.
Name of the Bank | Premature Withdrawal penalty |
SBI | 0.50% |
DBS Bank | 1% |
South Indian Bank | 0.50% |
Yes Bank | 0.50% to 0.75% |
IDFC First Bank | 1% |
ICICI Bank | 1% to 1.50% depending on the tenure |
HDFC Bank | 1% |
Kotak Mahindra Bank | 0.50% |
DCB Bank | 0.50% to 2% depending on the deposit amount |
Documents Required to Apply for NRO FD Account
The list of documents to be submitted to apply for an NRO FD Account is given below:
- Proof of identity (any of the following)
- Valid passport
- OCI Card
- PIO Card
- Any other Government-issued photo ID
- Proof of Address
- Overseas Address proof (foreign utility bill, driving licence, etc.)
- Passport with current foreign address
- Foreign bank statement
- PIO/OCI card
- KYC documents
- Aadhar Card
- Voter’s ID Card
- NREGA Card
- NRI Status Proof (anyone)
- Visa
- Work Permit
- Employment Contract
- PAN Card
- NRO FD application form
- Passport-size photo (2)
Difference Between NRO FD Account & NRE FD Account
The key differences between NRO FD and NRE FD Account are:
Type of Account | Deposit Currency | Withdrawal Currency | Taxable in India | Exchange Rate Risk | Repatriability |
NRO FD | Indian Rupees | Indian Rupees | Taxable-30% on interest earned | No foreign exchange risk involved | Interest earned is repartriable |
NRE FD | Foreign currency | Indian Rupees | Exempted in India. DTAA should be submitted | Open to fluctuations of Forex rates | Balances in the account are fully repatriable |
NRO Fixed Deposit FAQ’s:-
Non-Resident Indians (NRIs), Persons of Indian Origin (PIOs), and Overseas Citizens of India (OCIs) (excluding individuals residing in Nepal and Bhutan) are eligible. Please note that individuals from Pakistan require prior approval from the Reserve Bank of India (RBI).
NRO FD can be opened for 7 days to 10 years
Yes. Interest earned on Fixed Deposit is taxable at 30%
Yes. NRO FD can be closed before maturity but with a penalty.
Yes. However, the foreign currency will be automatically converted to Indian Rupees as the NRO FD is maintained in Indian Rupees.