Term deposits are popular as low-risk investments that allow you to safely grow your assets. But did you know that this option is not only open to domestic investors but also non-resident Indians (NRIs)?
NRIs can invest in fixed deposits through NRE FD. Although investments can be made in foreign currencies initially, FDs are maintained in Indian Rupees (INR). The minimum term for this type of FD is usually one year, but depending on the bank, the maximum term can reach 10 years. Interest rates on NRE FDs are similar to domestic FDs but may vary from bank to bank. Depending on the bank’s policy, interest is compounded quarterly or semi-annually. NRIs can take loans up to 90% of the FD amount against NRE FD as per the bank’s terms and conditions. These loans can be used for personal or business purposes in India, but cannot be used for investing in real estate.
Another important aspect of this type of FD is its tax treatment. Interest earned on NRE FD is tax-free in India. Additionally, the principal and interest earned on NRE FDs are fully repatriable, allowing investors to transfer funds to their country of residence without any restrictions. Early withdrawal of NRE FD is also allowed, but doing so may incur penalties and interest rate reduction, which also depends on the bank’s policy.
If you are an NRI planning to invest in fixed deposits, check the latest interest rates for FDs of up to 5 years from public sector banks.
Bank Name 1 – < 2 years 2 – < 3 years 3 – < 5 years Bank of Baroda 6.85%-7.30% 7%-7.15% 6.80%-7.15% Bank of India 6.80%-7.30% 6.75%-6.80% 6.50% Bank of Maharashtra 6.50%-7.15% 6.50%-7.25% 6.50% Canara Bank 6.85%-7.25% 6.85% 6.80% Central Bank of India 6.85%-7.45 6.50%-7.0% 6.75% Bank of India 6.1%-7.10% 6.70% 6.25% Indian Overseas Banks 7.10%-7.30% 6.80% 6.50% Punjab Sindh Bank 6%-7.45% 6.30%-7.25% 6.00% Punjab National Bank 6.80%-7.25% 6.80%-7% 6.40%-7% State Bank of India 6.80%- 7.25% 7.00% 6.75% UCO Bank 6.50%-7.05% 6.30%-6.50% 6.20%-6.30% Union Bank of India 6.6%-7.25% 6.40%-6.60% 6.50%-6.70%
Data obtained from each bank’s website as of October 21, 2024. Edited by BankBazaar.com
