Which Type of FD is Best for NRIs?

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NRIs or Non-Resident Indians have multiple options to choose from when it comes to investments in India. Out of the investment options, FDs are considered secure due to their traditional nature. In comparison with other investment options, NRI FDs offer guaranteed returns that are unaffected by market fluctuations. Hence, you can earn guaranteed returns, even as your principal amount grows steadily, without risks. Therefore banks & NBFCs encourage such NRIs to invest their funds in various types of fixed deposits which offer good returns.

Once you decide to invest in a fixed deposit account, you might want to know about the different types of FDs:

NRE Fixed Deposits – NRE Fixed Deposits are one of the most common options of fixed deposits available. Such kinds of FD allow an NRI to deposit his or her funds in the bank account as savings or investment and earn high rates of interest offered by the bank. In such types of FD accounts, deposits are accepted in Indian currency only. The interest rate and the tenure differ from a domestic FD. They are typically tax-free.

NRO Fixed Deposits – This is similar to NRE deposits, but the interest rates of NRO deposits are the same as the domestic deposit. Note that the money deposited in an NRO FD deposit is liable for tax and any NRI who has a source of income in India has to open an NRO deposit.

FCNR Fixed Deposits – A FCNR deposit allows you to invest your money in foreign currencies which are accepted all over the world. Most major banks accept GBP, USD, Euros, CAD, Japanese Yen, and the SGD.

RFC deposit – NRIs who wish to move back to India soon can use this type of NRI fixed deposit. In most banks, the United States Dollar, Great Britain Pound, and the Euro are allowed, and the interest earned in this FD is fully repatriable.

Fixed Deposit Rates:

In the types of NRE and NRO fixed deposits investment, the fixed deposit rates vary as per the financial institution and can range from 3.50% to 7.10% with tenures from 7 days to 10 years, respectively. In RFC, the rates can be from 0.01% to 2.38% based on the tenures from 29 days to 3 years, respectively. In FCNR, the rates will be from 2.30% to 2.55% with tenures from 1 year to 5 years respectively.

How to be eligible for NRI fixed deposit accounts:

  1. Passport details containing all the primary information about the NRI.
  2. Visa documents containing the work permit, permanent resident visa, resident permit as well the employment visa along with other requested documents.

Benefits of opening an FD account for NRIs:

  1. The funds invested in such FD accounts are safe and free from market risks
  2. A better option than having the funds in an idle NRI savings account
  3. FCNR and NRE FDs are exempted from tax
  4. One can apply for overdraft and loan facilities
  5. Nomination facility is also available

How to open an NRI fixed deposit:

One can open NRI fixed deposit account easily by visiting the branch of the bank or through the online mode.