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NRE Deposit

NRIs can deposit their foreign money in a Non-Resident External or NRE Account, which can be a Savings, Recurring, or Fixed Deposit Account. In India, an NRE deposit is held in Indian Rupees and is tax-free.

Meaning of NRE Deposit

NRIs can deposit their foreign currency into an India account using a Non-Resident External (NRE) FD account. The NRE account is denominated in Indian rupees and is tax-free. NRIs, PIOs, and OCIs can invest in NRE deposits using their NRO and NRE accounts.

The tenure of the Fixed Deposits varies from one to ten years. Furthermore, in India, both the investment and the interest earned on an FD are totally tax-free. They are eligible for the tax break - under Section 80C of the Internal Revenue Code.

NRE Account Interest Rates

The table below represents to you some of the NRE interest rates for 2022:

Banks

Interest Rates

DBS Bank

4.50% - 4.35%

Indian Overseas Bank (IOB)

5.20% - 5.25%

Central Bank of India

5.00% - 5.15%

IDBI Bank

5.05% - 5.50%

Bank of Baroda

4.90% - 5.25%

Canara Bank

5.00% - 5.25%

PNB

5.00% - 5.25%

HDFC Bank

5.00% - 5.45%

SBI

5.10% - 5.50%

Yes Bank

5.75% - 6.25%

ICICI Bank

5.00% - 5.45%

Axis Bank

5.10% - 5.75%

Kotak Mahindra Bank

5.10% - 5.50%

Bank of India

5.00% - 5.05%

Indusind Bank

6.00% - 6.50%

Citibank

2.75% - 3.50%

Oriental Bank of Commerce 

5.00% - 5.25%

Ujjivan Small Finance Bank

6.50% - 6.25%

AU Small Finance Bank

5.00% - 6.10%

Equitas Small Finance Bank Limited

6.00% - 5.25%

ESAF Small Finance Bank

6.50% - 5.25%

Eligibility Criteria to Invest in NRE Deposits

NRIs can readily invest their foreign currency in a Non-Resident External Fixed Deposit (NREFD). They must, however, meet the eligibility requirements. Foreign currency is remitted to an Indian bank account by NRIs. NRE accounts are denominated in Indian rupees and are tax-free. NRIs are not permitted to register a regular account under the Foreign Exchange Management Act (FEMA).

To open an NRE Fixed Deposit in India, you must meet the following requirements:

  • A Non-Resident Indian (NRI) or a Person of Indian Origin (POI) is required (PIO).
  • An NRE Savings Account is required.
Access to fixed deposits
of various banks
Invest without opening
a new bank account
Avail high interest rates
of up to 6.5%
OPEN FD ONLINE

Components of the NRE Deposit

Mentioned below are the major features of an NRE deposit:

1) Tenure: 

The tenure of the investment ranges from 1 to 10 years.

2) Deposit Currency:

The money is deposited in the Indian currency, and you can start the account through net banking.

3) NRE FD Rates:

NRE fixed deposit rates range from 8% for a year and can be calculated with an NRE deposit calculator.

4) Auto-Renewal:

The NRE deposit has the facility to be automatically renewed.

5) Insurance Coverage:

NRE deposits are covered by the DICGC insurance, and the investors can claim up to Rs. 5,00,000 compensation in the case of defaults.

6) Nomination Facilities:

You can choose to nominate a person for the scheme.

7) Loan Against FD:

You can also avail up to 95% of the sum against a loan or overdraft.

8) Deposit Limit:

The deposit limit of the scheme differs from bank to bank.

Difference Between NRE and NRO Accounts

An NRE FD is a form of term deposit account in which an NRI deposits money from abroad and remits it to an Indian account, where the money is converted into rupees. An NRE deposit is a type of term deposit used to deposit foreign profits.

An NRI will often register an NRO account in order to manage their money earned in India. Rent, pensions, and other sorts of dividends can all be used to supplement your income. The interest collected on these savings accounts is taxed.

An NRO account, and hence an NRO fixed deposit, can only be opened with funds originating in India. To open a fixed deposit from your NRO, you cannot transfer funds from another country. Funds from an NRE account, on the other hand, can be moved to an NRO account in order to open a fixed deposit.

NRE accounts are established by depositing foreign currency earned abroad into a fixed deposit account. It is not feasible to open an NRE fixed deposit by moving money from an NRO or a resident savings account.

Benefits of the NRE Deposit

Mentioned below are the advantages of investing in an NRE account:

  • The Indian rupee can be used to invest in FD accounts. Furthermore, internet banking can be used to open an NRE FD account.
  • Deposits in NRE FDs are totally tax-free. To put it another way, both the principal amount and the interest earned are tax-free. They are eligible for a tax break under Section 80C of the Internal Revenue Code.
  • The depositor's capital and interest are both freely repatriable to his or her home country.
  • In comparison to a typical savings account, the interest rates on NRE FDs are higher.
  • NRI depositors have the option of choosing a term of 1 to 10 years.
  • The NRE term deposit account allows for early closure in the event of a financial emergency.
  • Some banks provide overdrafts of up to 95% of their NRE term deposit balance. Loans against fixed deposits are also available.
  • NRE FDs are automatically renewed when they reach maturity. The money would be automatically reinvested back into the account.
  • Some financial institutions allow depositors to open new FD accounts together. Depositors can also nominate members of their families.
  • NRE deposits are insured up to INR 5,00,000 by the Deposit Insurance and Credit Guarantee Corporation (DICGC).

Comparison of FD rates

Name
Tenure
Highest Interest Rates
1
2
3
4
5

FAQs

Q1. What is the meaning of an NRE deposit?

It is the form of a deposit account where the NRI makes deposits from overseas.

Q2. Is the NRE deposit tax-free?

NRE deposits are exempt from taxes.

Q3. Are NRE savings account interest rates higher?

The interest rates would be different from each other.

Q4. What is the full form of NRE?

NRE means Non-resident external.

Q5. What is the minimum tenure for an NRE deposit?

The minimum tenure for the NRE tenure is a year.

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