Indians are present in almost all major countries globally and contribute largely to these nations’ economies. Since the last few decades, these Non-Resident Indians (NRIs) have played a key role in the Indian economy by investing their earnings in India. The government of India offers many attractive investment options to the NRIs. The most secure and benefitting is an NRI Fixed Deposit Account.
Why Fixed Deposits?
FDs are safe and low-risk investment tools. You earn a substantial return on your investment over time as the interest rates are higher than the savings accounts. The process of applying and opening FD accounts is simple and easy. The fluctuation in the market does not affect the returns that you earn on your investment in FDs.
Types of NRI-FDs in India
An NRI can open two types of fixed deposit accounts with any Indian bank:
*** NRE Fixed deposits**
NRE (Non-Resident External) accounts are ideal for the NRIs earning outside India in a foreign currency and would wish to get their money converted to an equivalent amount in Indian currency. The most striking feature of NRE-FD is that the interest on your investment is tax-free.
*** NRO Fixed deposits**
Non-Resident Ordinary (NRO) account fixed deposits is meant for NRIs who earn their income in India. The interest on NRO Fixed deposit is taxable and is subject to total repatriation, while there is a cap on the repatriation of the principal amount. In this FD, the risk of exchange rate fluctuation is zero.
Points to know about NRE fixed deposits
One should always know and understand the finer details of NRE-FD before investing their money in it. These are some essential points for consideration:
- NRE accounts are ideal for transferring your earnings in a foreign country to India
- The investment returns are high, and you can get a loan of up to 90% on your invested funds
- NRE FDs come with a flexible tenure of one year to ten years
- Different lenders offer varying interest rates on NRE-FD, depending upon the tenure of the FD
- One can open an NRE account with a minimum amount of Rs. 25,000 while the maximum capping is Rs. 2 crores
- Interest on your savings in NRE-FD is tax-free in India
- You can transfer the principal amount and the interest to any foreign account NRE account in India
- Depositing your money into any NRE account across the country is very simple. You can deposit foreign currency in cash, can transfer from any existing NRE/FCNR account, or can also remit the amount directly to the lender in some cases.
- You can have a joint applicant who must also be an NRI
- Withdrawal is possible only in the Indian rupee
- Current exchange rate will apply to the valuation of your funds
If you are NRI planning to invest in India, NRE fixed deposits are an ideal tool as your funds are safe, good returns on your investment are assured, your earnings are tax-free, and the process of opening an account is simple.