Best Fixed Deposit Rates for NRE in 2023

NRE or Non-Resident External accounts can be of Recurring, Savings, or Fixed Deposit type wherein NRIs can easily deposit their foreign currency that is remitted to an Indian bank account. In India, an NRE account is held in Indian Rupees and is completely free of tax. Here we are going to discuss how you will be able to select a suitable NRE FD and have mentioned the best fixed deposit interest rates offered by various Indian banks.

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NRIs are not eligible to open a normal account that is designed for an Indian Resident according to the guidelines of the Foreign Exchange Management Act (FEMA), and if one breaches this, he/she attracts a huge penalty. In addition to this, no interest is earned when the account is closed within one year.

Best NRE Fixed Deposit Interest Rates

Bank Interest rate range per annum for an amount less than Rs.2 crore
1 year 1 year to 3 years 3 years to 5 years 5 years to 10 years
Allahabad Bank 6.45% 6.35% -6,45% 6.25% 6.25%
Andhra Bank 5.75% 5.75% 5.80% 5.80%
Axis Bank 5.15% 5.40% 5.40% 5.50%
Bank of Baroda 4.90% 5.00% - 5.10% 5.25% 5.25%
Bank of India 5.25% 5.25% - 5.30% 5.30% 5.30%
Bank of Maharashtra 4.90% 4.90% 4.90% 4.90%
Canara Bank 5.20% 5.20% - 5.40% 5.50% 5.50%
Central Bank of India 4.90% 4.90% 5.00% 5.00%
Corporation Bank 5.75% 5.75% 5.80% 5.80%
Dena Bank 4.90% 5.00% - 5.10% 5.25% 5.25%
Dhanlaxmi Bank 5.25% 5.25% - 5.40% 5.50% 5.60%
Federal Bank 5.10% 5.10% - 5.50% 5.35% 5.50%
IDBI bank 5.00% 5.10% 5.10% 5.10%
Indian Bank 5.00% 5.10% 5.15% 5.15%
Indian Overseas Bank 5.20% 5.25% 5.25% 5.25%
IndusInd Bank 6.50% 6.50% 6.50% 6.25%
J&K Bank 5.10% 5.20% 5.30% 5.30%
Karnataka Bank 5.30% 5.30% to 5.55% 5.55% 5.70%
Kotak Mahindra Bank 4.50% 4.50% to 5.00% 5.10% - 5.25% 5.30%
Oriental Bank of Commerce 5.50% 5.50% 5.40% 5.40%
Punjab and Sind Bank 5.25% 5.25% 5.25% N/A
Punjab National Bank 5.20% 5.20% 5.30% 5.30%
State Bank of India 5.00% 5.00% - 5.10 5.30% 5.40%
Syndicate Bank 5.20% 5.20% -5.40% 5.50% 5.50%
UCO bank 4.90% 5.00% 5.05% 5.05%
Union Bank of India 5.25% 5.30% - 5.50% 5.55% 5.60%
Vijaya Bank 4.90% 5.00% -5.10% 5.25% 5.25%
Yes Bank 6.25% 6.25% -6.50% 6.75% 6.75%
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Advantages of an NRE FD Account

  • Both principal amount and interest earned is free of tax in India.

  • Higher interest rates are provided as compared to savings accounts.

  • The interest earned and principal amount both are freely repatriable to the country of residence of the account holder.

  • Can jointly be opened with other NRIs.

  • NRE FD is easily covered under the Deposit Insurance and Credit Guarantee Corporation (DICGC) insurance (a compensation of up to Rs.5 lakh is given to the depositor if the bank defaults).

  • The tenure of fixed deposits is flexible and can range from one year to 10 years.

Difference Between NRE & NRO Account

With the availability of so many insurance products in the industry, it is quite difficult and confusing at the same time to opt for one right product. A better understanding of the available products and services can help you make an informed decision. It also helps in differentiating the possible available avenues. In this way, you can select the right investment option where you can invest all your hard-earned savings. Better returns can be generated based on your requirements and preferences. 

As stated, NRE, i.e., Non-Residential External, and NRO, i.e., Non-Resident Accounts, are two major account categories available for an NRI. If, as an NRI, you want to save and get better returns, then this is the most popular option that you can consider. The below table summarizes the differences between NRE and NRE accounts that help in making your selection easy. Here’s a quick laydown: 

Parameters  NRE Accounts  NRO Accounts
Explanation  It is a type of account that helps a Non- Resident Indian to transfer his/her foreign income to India, in any denominations but converted into Indian rupees. It is a type of account that helps a Non- Resident Indian to 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. This account is an ideal option if you want to keep your savings in a liquid form.  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  Deposit in NRE account is made in foreign currency  Deposit in NRO account is 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.

Disclaimer: Policybazaar does not endorse, rate, or recommend any particular insurer or insurance product offered by an insurer. 

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What an NRI Gets in NRE Fixed Deposit

There are many features that an NRI gets in NRE Fixed Deposits:

  • One can deposit money in Indian rupees

  • These plans offer flexible tenure, which may range from one year to ten years

  • An NRE FD account can easily be closed any time after opening

  • The facility of auto-renewal is provided by banks at the time of renewal at the time of maturity

  • Some banks offer up to 90% overdraft over the NRE FDs

  • Some banks offer the facility of loans against NRE FD

  • Some banks also allow joint NRE fixed deposit accounts

  • The banks have stipulations regarding the minimum and maximum amounts that a person deposit

  • The banks can as well provide tax-saver fixed deposit accounts to Non-resident Indians that allow them to claim tax benefits u/s 80C of the Income-tax Act

Loan Against NRE FD

During a financial crisis, people tend to look for loans from different sources. One of the main sources is to get loans against the FD (Fixed Deposits) from banks. This is one of the best ways to get a short-term loan. 

NRIs are allowed to open NRE or Non-Resident External accounts. These accounts are term or fixed deposits for NRIs. An investor can obtain a loan against the NRE FD account from banks such as HDFC, ICICI, SBI, etc. 

In NRE FD, Non – Resident Indians can deposit their money in the bank as investment and savings. Better returns are offered by the banks. As we have discussed, the NRE deposits are only allowed in Indian currencies. They also provide complete transferability, and the interest earned is exempted from taxes. 

Following are the key features of availing loan against NRE FD 

  • The loan can be availed to carry out any type of business activity, for buying a flat in India, or for meeting 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 depositor only. 

  • Interest rate is charged in both foreign currency and Indian rupee loan at monthly intervals.

  • NRE deposit is not permissible for premature withdrawal. 

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Eligibility to Avail Loan against NRE FD 

  • The investor’s passport should have the name, date of birth, photograph, address, and signature. 

  • Visa documents showed by the investor should have a work permit, visa for permanent resident, employment visa, or residence permit. 

  • As per the various insurers such as SBI, the loan facility against FD is only available to the NRIs having an NRE deposit account with 6 months of residual period. 

Insurers Offering Loan Against FD

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 percent of your FD
Federal Bank 2 % above the rate of FD  Up to 90 percent of your FD

Disclaimer: Policybazaar does not endorse, rate, or recommend any particular insurer or insurance product offered by an insurer.

Eligibility to Get NRE Fixed Deposits

One should fulfill the below criteria for opening an NRE Fixed Deposit account:

  • An individual should be a Person of Indian Origin or Non-Resident Indian (NRE).

  • The person should have an NRE account. 3

Documents Needed to Open an NRE FD Account

For opening an NRE fixed deposit account, one has to submit the following documents:

  • A valid ID proof

  • Passport

  • Valid work visa

Benefits of NRE FDs

An NRI who opens an NRE FD account is liable for availing the following benefits:

  • An NRI is eligible to open a Fixed Deposit account in India and can earn good interest.

  • These deposits work as a ready fund when one faces some unforeseen situation because NRE Fixed Deposits can be closed prematurity.

  • The banks provide the facility of overdraft and loan against FD so that a depositor can have money when needed.

  • The facility of the nominee is provided in NRE Fixed Deposits.

The Final Words!

It is really difficult to select the best when we have a list of the best things, and so does happens with the Fixed Deposit interest rates provided for an NRE account. However, there are some factors that one may consider while selecting a bank for opening an NRE Fixed Deposit account. These are the good interest rate and a long term and trustworthy relationship with that bank. One must as well check whether the account one is opening is operable from his/her country of residence. Some banks have their branches in countries like the UK, the USA, the Middle East, etc.

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