Fixed deposits: Top banks’ NRE FD schemes compared; check details before investing

NRI investment: Fixed deposits are a popular and low-risk investment option that enables individuals to safely grow their wealth. NRE Fixed Deposits offer NRIs a lucrative Rupee investment opportunity for their foreign income. This option allows them to earn tax-free interest and obtain full repatriability on their foreign earnings, along with the possibility of securing a loan of up to 90% of the deposit amount at competitive interest rates.

Non-resident Indians (NRIs) have the opportunity to invest in fixed deposits through NRE FDs, where the initial investment can be made in a foreign currency but the FD is maintained in Indian Rupees (INR).

Typically, the minimum tenure for this type of FD is 1 year, with the maximum tenure varying depending on the bank, but potentially extending up to 10 years. Interest rates for NRE FDs are generally on par with domestic FDs, although they may differ from bank to bank. The interest on NRE FDs is compounded either quarterly or half-yearly, based on the bank’s policies. NRIs also have the option to take loans against their NRE FDs, up to 90% of the FD amount, subject to the terms and conditions set by the bank. These loans can be used for personal or business purposes within India, excluding investments in real estate.

When considering this type of FD, it is essential to note its tax treatment. Interest earned on NRE FDs in India is exempt from tax. Furthermore, both the principal amount and interest earned on NRE FDs can be freely repatriated, allowing investors to transfer funds back to their country of residence without restrictions. While premature withdrawal of NRE FDs is permitted, it may result in penalties or a reduction in interest rates, depending on the bank’s policy.

For NRIs looking to invest in fixed deposits, it is advisable to review the current interest rates for FDs with tenures of up to 5 years offered by public sector banks.

Bank Name 1 –

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%
Indian Bank 6.1%-7.10% 6.70% 6.25%
Indian Overseas Bank 7.10%-7.30% 6.80% 6.50%
Punjab & Sind 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%