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Best NRE FD Accounts for NRI’s

Best NRE FD Accounts for NRI’s

The slow growth of the global economy has forced the central banks across the globe to trim down interest rates on deposits.[…]

As the global economy is witnessing a downfall for over a year, most of the banks in India have trimmed down the interest rates offered on the fixed deposits. There was a time when the fixed deposits offered the best returns on investments. But now, with the slow growth of the economy, the RBI has taken a slew of measures to keep the economy of the country stable amidst uncertain external factors.

Some of the banks in India offer best interest rates on fixed deposits for Non - Resident External Deposit Accounts and it usually differs from the domestic fixed rates offered to the resident Indians.

Let's understand more about NRE Accounts and other related terms.

What is NRI?

NRI full form is Non-Resident Indian. The term NRI means people of Indian birth or descent or origin who reside outside the Republic of India for employment or for carrying on the business of vocation in circumstances as would indicate an intention to stay outside the country for an indefinite period.

For Income Tax purpose, the term non-resident refers to a person who, as per Section 6 of the Income Tax Act of 1961, has not resided in India

  • For a specified period of at least 182 days in a financial year
  • For 365 days spread out for over four consecutive years.

As per the act, any Indian citizen who does not meet the criteria as a resident of India is termed as a Non-Resident Indian and is treated as NRI for paying Income Tax.

What is NRE?

NRE or the Non-Resident External deposit accounts is a facility provided to the NRIs wherein the non-resident Indians can invest their foreign earnings in India and fetch a high return on the investments as rupee deposits.

The NRE account comes in handy for NRI's who often face challenges to maintain a rupee account in their homeland India. There are mainly two reasons to open an NRE account and they are:

  • Most of the NRI's want to repatriate their overseas earned money back to India
  • NRI's wants to keep their India based earnings in India.

Banks in India provides an option for NRIs to open and operate either Non-Resident Rupee (NRE) account and or a Non-Resident Ordinary Rupee (NRO) account.

Features of NRE Deposits

  • The account can be closed at any time after opening.
  • Money can be deposited in Indian rupees.
  • Some of the banks in India allow NRE deposits to be held jointly
  • Auto-renewal facilities are offered by banks wherein the FD gets renewed on maturity.
  • Provides NRE depositors with overdraft facility of up to 90%
  • Some banks offer loans against NRE deposits.
  • NRE deposits provide flexible tenure which ranges between 1 - 10 years.
  • Tax saver fixed deposits offer from some of the banks which help NRIs to claim for tax benefits as per Section 80C of the IT Act.
  • Few banks in India even allow NRE deposits to be held jointly
  • Banks will fix the stipulated minimum and maximum amount to be deposited in the NRE accounts.

Benefits of NRE Accounts

  • These accounts are exempt from tax and both the principal and interest amount is free from tax.
  • The account is primarily used to make a direct investment in India
  • It can be used either for personal purpose or for carrying out a business activity in India.
  • NRE account holders are free to repatriate (transfer) the principal and interest amount to a foreign account, without facing any restrictions.

The following list of NRE FD Accounts offer highest interest rates for NRI's

1. Lakshmi Vilas Bank

Started in the year 1926 by a group of seven businessmen of Karur in Tamil Nadu has grown to become of the leading private sector banks in India. The bank offers an attractive interest rate on NRE fixed deposits at 7.80% for 450 days.

Interest Rate for Deposits less than Rs 2 Crore

Period of Deposit Interest Rate
365 days - 449 days 7.50%
450 days 7.80%
451 days - 989 days 7.50%
990 days 7.60%
991 days - < 5 years 7.50%

2. DCB Bank

DCB Bank is one of the private sector scheduled commercial banks in the country which offers products to individuals, rural banking, small and medium businesses, mid corporates through its branch network which has its presence at 334 locations in India. The bank offers NRI FD interest rates at 7.70% for 36 months.

Interest Rate for Single Deposits of less than Rs 2 Crore

Period of Deposit Interest Rate
12 months 7.00%
12 months 1 day - 7.25%
15 months - < 18 months 7.50%
18 months 7.60%
More than 18 months - 7.50%
24 months 7.40%
More than 24 months - < 36 months 7.40%
36 months 7.70%
More than 36 months - 60 months 7.50%
More than 60 months - 120 months 7.25%

3. IndusInd Bank

Established in 1994, the bank offers transactional, electronic and commercial products and services to its customers. The bank holds the tag of being the first among the new-generation private banks in the country. It offers an interest rate on NRE FD's at 7.50% for a tenure ranging between 2 years 6 months to below 2 years 9 months.

Key Takeaways from IndusInd Bank's NRE FD's

  • The interest amount is exempt from income tax in India.
  • Both the principal and interest amount are fully repatriable.
  • The term of the fixed deposits for NRI's vary between 1 - 3 years.

4. IDFC First Bank

The merger of IDFC Bank with Capital First Limited resulted in the formation of IDFC First Bank. The merger took place in December 2018. The NRE deposits have to be made in Indian rupees only and if the account holder remits funds in foreign currency, then these funds will be converted to Indian rupees at the prevailing exchange rate as on the date of the transfer before deposit booking.

The IDFC First Bank offers a maximum interest rate of fixed deposits for NREs at 7.50% for 500 days.

Interest Rate for Deposits less than Rs 2 Crore

Period of Deposit Interest Rate
7-14 days 4.00%
15-29 days 5.00%
30-45 days 6.25%
46-90 days 6.50%
91-180 days 6.75%
181 days - < 1 year 7.00%
1 year-499 days 7.25%
500 days 7.50%
501 days-10 years 7.25%

5. RBL Bank

Previously known as Ratnakar Bank, the RBL Bank is one of the private sector banks in India founded way back in the year 1943. With a network of 372 branches spread across the length and breadth of the country, the bank offers the best NRI FD rates at 7.45% for deposits whose tenure ranges between 24 months to less than 36 months.

Interest Rate for Deposits less than Rs 2 Crore

Period of Deposit Interest Rate
12 months - < 24 months 7.40%
24 months - < 36 months 7.45%
36 months - < 60 months 7.20%
60 months - < 120 months 7.35%
120 months - 240 months 6.85%
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