A Fixed Deposit is a fixed income instrument offered to both citizens of India as well as NRIs. NRIs have several FDs to choose from. Majorly, four types of FDs are offered by the bank to NRIs. They are NRE (Non-Residential External), NRO (Non-Resident Ordinary), FCNR (Foreign Currency Non-Resident Account), and RFC (Resident Foreign Currency) deposits. NRE deposits are one of the most preferred deposits as it offers full repairability and is completely tax-free. The difference between NRE and NRO deposits is that NRE is not subjected to tax, whereas the latter is subjected to tax. FCNR deposit is a type of deposit where the investors can deposit their money in foreign currency as well. RFC deposit can be opened by those investors who wish to move back to India.
Benefits of Fixed Deposits
- NRE and NRO types of Fixed Deposits are exempted from tax.
- All the investments made with the highest fd interest rates by the investor are safe and secure.
- One of the ideal options for an NRI to deposit and save the money earned outside the country.
- The rate of returns is extremely impressive.
- Multiple facilities are provided on an FD such as overdraft and taking a loan.
- Moreover, these FDs are accredited with the highest safety ratings from top agencies such as FAAA.
Interest Rates for NRIs
Interest rates depend on the financial institution and the duration. Different institutions offer different interest rates across multiple periods. On average, most of the banks offer between 4-7% of the rate of return per annum for NRE and NRO deposits. For the FCNR type of deposit, an interest rate of 1.8-2.75% in USD is offered for a tenure of 1 year to 5 years. For RFC, the interest rate as low as 0.01% to as high as 2.75% (in USD) is offered by different banks at different intervals.
Wide Choice of FD Tenure
Usually, everybody invests in an Fixed Deposit (FD), keeping the duration of return in mind. The tenure offered could range from as less as seven days to as high as ten years. The tenure for NRE FD varies from 1 week to 1 year to 10 years, and that for NRO is the same for all the banks between 1 week to 10 years. FCNR type of deposit offers tenure of 1-5 years, and the RFC deposit offers a tenure of 30 days to 5 years.
Documents Required for NRIs:
- Passport: The passport should provide the name, address, photograph, date of birth, and the signature.
- Visa/Work Permit: Visa document is mandatory along with Permanent Resident visa, resident permit, work permit, and other required documents.
The process of opening an FD is a very simple one. It can be done offline as well as online, albeit most of the investors prefer it online as it avoids all the hassle. Moreover, investing the money with the highest FD rate can be a safe option and beneficial for NRIs who can keep their money safe back home.