NRE Fixed Deposit Interest Rates Comparison

Non-resident Indians (NRIs) typically open bank accounts to deposit their income, originating from India or any other country. They look to invest this money in various investment options in India. Most NRIs face a plethora of avenues when it comes to investing their money in Indian banks.

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Several banks offer myriad options to NRIs for their banking and investment needs in India, ranging from a bank account to investment and foreign exchange services. Amongst the various options, NRE Deposit is amongst the more preferred options. 

An NRE Deposit is a term deposit in which the NRI invests in foreign currency, which will be converted into Indian Rupees. Generally, an NRE term deposit is utilized to remit foreign earnings, and the interest earned is free from income tax. NRE stands for Non-Resident External.

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Fixed Deposits, Guaranteed Return Plans & Debt Mutual Fund
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Debt Mutual Fund
Guaranteed Return Plans
Returns Before Tax
7.5% (TAX-FREE)
Returns After Tax
7.5%
Guaranteed Returns
Yes
Life Cover
Yes
Tax on Profit
Tax Free*
Risk
No Risk
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Fixed Deposits
Returns Before Tax
7% (TAXABLE)
Returns After Tax
4.8%
Guaranteed Returns
Yes
Life Cover
No
Tax on Profit
Taxable
Risk
Low Risk
Debt Mutual Fund
Returns Before Tax
8% (TAXABLE)
Returns After Tax
5.5%
Guaranteed Returns
No
Life Cover
No
Tax on Profit
Taxable
Risk
High Risk
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Who can Invest in NRE Deposits?

An NRI or Overseas Citizen of India or a Person of Indian Origin and their spouses can open an NRE deposit. The depositor shall have opened NRE account(s) with a bank or FI, which is authorized by the Reserve Bank of India, to provide various banking services to NRIs.

Characteristics of NRE Deposits

  • NRIs, who earn income in foreign currency outside India and wish to get it converted to Indian Rupee, make use of the NRE deposit.

  • Both the principal amount as well as the interest can be repatriated entirely.

  • NRE deposit is denominated in Indian Rupees.

  • It can be held jointly with other NRIs.

  • Auto-renewal facilities are available.

  • Flexible tenures generally ranging from 1 year to 10 years are available.

  • Some banks offer loans, including overdrafts, against NRE deposits.

  • Some banks provide a 'sweep-in sweep out ' facility between NRE bank account and NRE deposits.

  • The deposits provide a nomination facility.

  • Full or partial withdrawal of the NRE deposit is allowed.

  • Premature closing of the deposit is allowed at any given point in time.

  • The NRE deposit is insured up to a prescribed limit by the Deposit Insurance and Credit Guarantee Corporation.

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Benefits of NRE Deposits

  • Attractive returns: By investing in NRE deposits, NRIs can earn interest income at attractive FD interest rates. Interest rates in India have been higher than in many western countries for many years. However, there is no additional interest rate for senior NRI citizens.

  • No tax liability: Interest income from NRE deposits does not have any tax liability under the Income Tax Act 1961.

NRE Deposit Interest Rates Comparison

The foremost differentiating factor in choosing a bank for opening an NRE deposit is the FD interest rate¸ along with the tenure. The following table provides a detailed list of the FD interest rates on NRE, their deposits of an amount less than Rs 2 Crore, by various banks in India.

Name of the Bank FD Interest rates p.a. for an amount less than Rs 2 Crore
1 year More than 1 year < 3 years More than 3 years < 5 years More than 5 years < 10 years
Abhyudaya Co-operative Bank 5.50% 6.00% 5.75% 5.75%
AU Small Finance Bank 6.35% 6.35% to 6.50% 6.25% 6.50%
Axis Bank 5.10% 5.10% to 5.40% 5.40% 5.75%
Bank of Baroda 5.05% 5.05% to 5.15% 5.35% 5.35%
Bank of India 5.25% 5.25% to 5.30% 5.30% 5.30%
Bank of Maharashtra 4.90% 4.90% 4.90% 4.90%
Bombay Mercantile Co-operative Bank 4.90% 4.90% to 5.10% 5.30% 5.40%
Canara Bank 5.20% 5.20% to 5.50% 5.50% 5.50%
Central Bank of India 4.90% 4.90% to 5.10% 5.10% 5.10%
City Union Bank 5.50% 5.50% to 5.75% 5.50% 5.25%
Cosmos Cooperative Bank 5.30% 5.50% 5.50% 5.80%
DCB Bank 5.80% 5.80% to 6.00% 6.50% 6.50%
Dhanlaxmi Bank 5.25% 5.25% to 5.40% 5.50% 5.60%
Equitas Small Finance Bank 6.50% 6.50% to 6.65% 6.40% 6.65%
ESAF Small Finance Bank 6.00% 6.00% to 6.50% 5.25% to 5.75% 5.25%
Federal Bank 5.10% 5.10% to 5.35% 5.35% 5.50%
HDFC Bank 4.90% 4.90% to 5.15% 5.30% 5.50%
ICICI Bank 4.90% 4.90% to 5.15% 5.35% 5.50%
IDBI Bank 4.90% 5.00% to 5.10% 5.25% 5.25%
IDFC First Bank 5.50% 5.50% to 5.75% 6.00% 5.75%
Indian Bank 5.00% 5.10% 5.25% 5.15%
Indian Overseas Bank 5.20% 5.20% to 5.25% 5.25% 5.25%
IndusInd Bank 6.50% 6.50% 6.50% 6.25%
J&K Bank 5.10% 5.10% to 5.20% 5.30% 5.30%
Karnataka Bank 5.30% 5.30% to 5.55% 5.55% 5.70%
Karur Vysya Bank 5.50% 5.50% 5.65% 5.75%
Kotak Mahindra Bank 4.50% 4.50% to 5.00% 5.10% to 5.25% 5.30%
Punjab and Sind Bank 5.15% 5.15% 5.30% Nil
Punjab National Bank 5.10% 5.10% 5.25% 5.25%
Saraswat Co-operative Bank 5.10% 5.25% 5.25% Nil
SVC Co-operative Bank 5.30% 5.30% 5.60% Nil
South Indian Bank 5.40% 5.40% 5.50% to 5.65% 5.50%
State Bank of India 5.00% 5.00% to 5.10% 5.30% 5.40%
Tamilnad Mercantile Bank 5.75% 5.65% to 5.75% 5.50% 5.50%
TJSB Bank 5.00% 5.50% 5.60% 5.75%
UCO Bank 4.90% 5.00% 5.05% 5.05%
Ujjivan Small Finance Bank 6.50% 6.50% to 6.75% 6.75% 5.80%
Union Bank of India 5.25% 5.30% to 5.50% 5.55% 5.60%
Yes Bank 6.00% 6.00% to 6.25% 6.50% 6.75%
Zoroastrian Co-operative Bank 5.00% 5.00% 4.75% 4.75%
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Source: Bank websites

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While small finance banks offer the highest FD interest rates, several NRI investors would be risk-averse to investing in small finance banks as well as cooperative banks. IndusInd Bank offers the highest FD interest rate @6.50% p.a. for 1 year to 5 years among the private sector banks. Amongst the public sector banks, Union Bank of India offers the highest FD interest rates @5.50% p.a. for 2 years to 3 years, @5.55% p.a. for 3 years to 5 years, and @5.60% p.a. for 5 years to 10 years.

The following table compares the FD interest rates on NRE deposits of amounts more than Rs 2 Crore by some of the banks mentioned above.

Name of the Bank FD Interest rates p.a. for an amount more than Rs 2 Crore
1 year More than 1 year < 3 years More than 3 years < 5 years More than 5 years < 10 years
Abhyudaya Co-operative Bank 5.50% 6.00% 5.75% 5.75%
Axis Bank 4.15% 4.15% to 4.35% 4.35% 4.35%
Bank of Baroda 3.55% 3.55% to 4.10% 3.25% 3.25%
Bank of India 3.50% 3.50% 3.50% 3.50%
Bank of Maharashtra 4.90% 4.90% 4.90% 4.90%
Bombay Mercantile Co-operative Bank 2.90% 2.90% to 3.00% 3.00% 3.00%
Canara Bank 3.90% 3.90% 3.40% 3.40%
Central Bank of India 3.50% 3.50% 3.50% 3.50%
City Union Bank 5.50% 5.50% to 5.75% 5.50% 5.25%
Cosmos Cooperative Bank 5.30% 5.50% 5.50% 5.80%
Federal Bank 4.25% 4.25% to 4.75% 4.75% 4.75%
HDFC Bank 3.75% 3.75% to 4.25% 4.25% 4.25%
ICICI Bank 3.75% 3.75% to 4.40% 4.40% 4.40%
IDBI Bank 3.50% 3.50% to 3.75% 3.75% 3.75%
IDFC First Bank 6.75% 7.00% 7.00% 7.00%
Indian Bank 3.55% 3.25% 3.25% 3.25%
IndusInd Bank 6.00% 6.00% to 6.25% 6.25% 6.00%
J&K Bank 3.85% 3.85% 4.10% -
Karnataka Bank 5.30% 5.30% to 5.55% 5.55% 5.70%
Karur Vysya Bank 5.50% 5.50% 5.65% 5.75%
Kotak Mahindra Bank 4.00% 4.00% to 4.50% 4.60% to 4.75% 5.00%
Punjab National Bank 3.50% 3.50% 3.50% 3.50%
Saraswat Co-operative Bank 4.25% 4.70% 4.70% -
SVC Co-operative Bank 5.30% 5.30% 5.60% Nil
State Bank of India 3.00% 3.00% 3.00% 3.00%
Tamilnad Mercantile Bank 5.45% 5.25% to 5.45% 5.15% 5.15%
UCO Bank 3.50% 3.25% to 3.50% 3.25% 3.25%
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The rates as mentioned above are generally for amounts ranging from Rs 2 Crore to Rs 5 Crore. Some of the banks offer bulk FD interest rates for deposits amount over Rs 5 Crore. 

NRIs are generally known to invest in deposits from some popular banks such as SBI, ICICI Bank, and HDFC Bank, although interest rates on offer may not be the highest. E.g. ICICI Bank FD rate ranges between @3.75% p.a. to 5.50% p.a.

FD interest rates India have fallen consistently over the last 12 years.
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