Is NRE FD interest tax-free in India?

NRE FD interest and principal are exempt from tax in India. This falls in favour of Singapore-based NRIs because foreign-sourced interest income is generally not taxed for individuals in Singapore.

Can I prematurely withdraw from an NRE FD?

Many banks allow NRIs to prematurely withdraw from an NRE Fixed Deposit. Though the withdrawal generally attracts a penalty of 1%. If you break an NRE FD before 12 months, no interest will be paid by your bank.

What is the maximum amount I can deposit in an NRE FD?

There is no limit on the maximum amount you can deposit in an NRE FD account as long as the money is sourced legally, from your country of residence.

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Best Fixed Deposit Rates for NRE Accounts in 2026

NRE or Non-Resident External accounts can be of Recurring, Savings, or Fixed Deposit type, wherein NRIs can easily deposit their foreign currency. In India, an NRE account is held in Indian Rupees and interest earned on the deposits are tax-free. In this article, we discuss the best NRE FD rates offered by Indian banks and how you will be able to select a suitable NRE FD.

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Best NRE Fixed Deposit Interest Rates 2026

Here is the list of banks offering the best NRE FD rates in 2026 for NRIs living in Singapore:

Bank	Highest Interest Per Annum for deposits less than ₹3 crores
IDFC First Bank	7.35%
ICICI Bank	6.50%
Axis Bank	6.50%
Bank of Baroda	6.30%
DBS Bank	6.75%
HDFC Bank	6.50%
State Bank of India	6.45%
IDBI Bank	6.50%
Bank of India	6.70%
IndusInd Bank	7%

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How Currency Fluctuations Affect NRE FD Returns for Singapore-based NRIs

Your actual returns from an NRE Fixed Deposit depend on the currency exchange rate, especially during the deposit and maturity phase of your FD. Fluctuations in currency rates can add to or deplete your FD returns.

During Deposit

At the time of deposit in your NRE FD, your Singapore Dollars (SGD) are converted into INR at the prevailing exchange rate.
This implies that weaker INR during deposit works in your favour, because each SGD buys you more INR for your FD.

During Maturity

During the maturity of your NRE FD, the principal and interest in INR are converted back into SGD.
If the Indian Rupee has strengthened against SGD during your deposit tenure, you may get benefits from the currency gain on top of your FD interest.

What is the Difference Between NRE & NRO Accounts

For Singapore-based NRIs seeking optimal financial solutions, NRE (Non-Residential External) and NRO (Non-Resident) accounts stand out as key options. Choosing between them can impact your savings and returns significantly. The table below summarises the differences between NRO and NRE accounts:

Parameters	NRE Accounts	NRO Accounts
Explanation	This account facilitates Non-Resident Indians in transferring foreign income to India in any currency converted to Indian rupees.	It is a type of account that helps a non-resident Indian manage the income earned in India in Indian denominations.
Tax	Deposits done in NRE accounts are free of taxes. The earned interest and the principal sum are exempted from tax.	The earned interest is taxable under NRO accounts. It is subjected to a Tax Deduction at Source or TDS.
Transferability	Money or deposits in the NRE accounts are transferable, i.e., repatriable. The earned interest and the principal amount are fully and freely transferable.	NRO account funds can be transferable after the payment of the applicable taxes within a set limit, i.e., USD 1 million in an FY (Financial year)
Joint Account	You are allowed to open this type of account with another NRI.	You are allowed to open this type of account with an NRI and/or with any Indian Resident.
Eligibility Conditions	NRE account is suitable for those who want to hold or maintain their overseas earnings in Indian currencies.	NRO accounts are suitable for individuals who wish to save their earnings from India in the Indian denomination itself. These incomes include income dividends, rent, property sales, etc.
Deposits	Deposits in NRE account are made in foreign currency	Deposits in NRO account are done in Indian and also in foreign currency
Withdrawals	Withdrawal in Indian currency	Withdrawal in Indian currency
Risk of Exchange Rate	Susceptible to risk	Non-susceptible to risk
Fluctuations in Currency	NRE deposits are exposed to the fluctuations of the exchange rate as well as loss of conversion	NRO deposits are not exposed to daily fluctuations in the currency.

Loan Against NRE FD

While NRIs can save and invest in NRE FDs, the FDs can also be used to avail loans against them.

NRIs can avail the loan to carry out business activities, buy property in India, or for other financial needs.
The loan can be availed in Indian Rupees or Foreign currency against the NRE account deposit.
The loan is provided to the NRI depositor only.
Interest rate is charged in both foreign currency and Indian rupee loans at monthly intervals.
NRE deposit is not permissible for premature withdrawal.

What is the Eligibility to Avail a Loan against NRE FD?

An investor’s passport must include name, date of birth, photograph, address, and signature; essential for NRI status verification.
Visa documents should display a work permit, permanent resident visa, employment visa, or residence permit to qualify as an NRI investor.
SBI and other insurers stipulate that NRI loan facilities against FD are exclusively for those with an NRE deposit account, requiring a 6-month residual period.

Banks Offering Loans Against NRE FD

Some banks offering loans against NRE FD for NRIs is given in the table below:

Banks	Rate of Interest	Loan Amount
Axis Bank	2% above the rate of term deposit	Rs. 25000
SBI	1% above the rate of relative FD	Rs. 25000 – Rs. 5 Crore
HDFC Bank	2% above the rate of FD	Up to 90% of your FD
Federal Bank	2% above the rate of FD	Up to 90% of your FD

What Benefits Do NRIs Get in NRE Fixed Deposit?

NRE Fixed Deposits for NRIs in Singapore offer various benefits as listed below:

Deposits in Indian rupees are accepted.
Flexible tenures from one to ten years.
Easy closure anytime after opening.
Auto-renewal facility at maturity.
Some banks provide up to 90% overdraft.
Loans against NRE FDs are available.
Joint NRE FD accounts are allowed.
Minimum and maximum deposit amounts apply.
Tax-saver FDs for NRIs with benefits under section 80C of the Income-tax Act.

What is the Eligibility to Open an NRE Fixed Deposit Account?

An NRI opening an NRE Fixed Deposit account in India must satisfy the following eligibility criteria:

You must be a Person of Indian Origin or Non-Resident Indian (NRI).
You need to have an active NRE Savings Account in India. This account will be used to fund your NRE FD and receive the interest earned.

Documents Required to Open an NRE FD Account

To open an NRE fixed deposit account in India as a Singapore-based NRI, you may have to submit the following documents:

Proof of NRI status
Passport
Residency proof of Singapore
PAN Card
Recent photographs

Final Words

Exploring the best fixed deposit rates for NRE accounts in 2026 can be a strategic financial move for NRIs living in Singapore, offering the potential for attractive returns and financial stability. It is advisable to carefully assess the available options to make informed decisions aligning with your investment goals and preferences.

FAQs

Is NRE FD interest tax-free in India?

NRE FD interest and principal are exempt from tax in India. This falls in favour of Singapore-based NRIs because foreign-sourced interest income is generally not taxed for individuals in Singapore.
Can I prematurely withdraw from an NRE FD?

Many banks allow NRIs to prematurely withdraw from an NRE Fixed Deposit. Though the withdrawal generally attracts a penalty of 1%. If you break an NRE FD before 12 months, no interest will be paid by your bank.
What is the maximum amount I can deposit in an NRE FD?

There is no limit on the maximum amount you can deposit in an NRE FD account as long as the money is sourced legally, from your country of residence.

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˜The insurers/plans mentioned are arranged in order of highest to lowest first year premium (sum of individual single premium and individual non-single premium) offered by Policybazaar’s insurer partners offering life insurance investment plans on our platform, as per ‘first year premium of life insurers as at 31.03.2025 report’ published by IRDAI. Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by any insurer. For complete list of insurers in India refer to the IRDAI website www.irdai.gov.in

*Past 10 Year annualised returns as on 01-09-2026
*All savings plans are provided by the insurer as per the IRDAI approved insurance plan. Tax benefit is subject to changes in tax laws. Standard T&C Apply
^The tax benefits under Section 80C allow a deduction of up to ₹1.5 lakhs from the taxable income per year and 10(10D) tax benefits are for investments made up to ₹2.5 Lakhs/ year for policies bought after 1 Feb 2021. Tax benefits and savings are subject to changes in tax laws.
¶Long-term capital gains (LTCG) tax (12.5%) is exempted on annual premiums up to 2.5 lacs.
**Returns are based on past 10 years' fund performance data (Fund Data Source: Value Research).
^Returns as on 10th Jan'25. 18% returns for Tata AIA Life Top 200 for the last 10 years.The past performance is not necessarily indicative of future performance. Source: Morningstar

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