Like other Indian citizens, NRIs can not open a normal account as per the Foreign Exchange Management Act or FEMA guideline. An NRE or Non-Resident External account can be opened as a savings account, recurring deposit, or fixed deposit. In all of these NRE accounts, NRIs deposit in foreign currency, and at the time of deposition, it is remitted to Indian currency. The NRE account is tax-free. Here we will discuss the fixed deposit plan for NRIs.
Benefits of Fixed Deposit for NRI
There are several benefits that an NRI can avail by opening and NRE fixed deposit account. They are:
- For NRE fixed deposit account, both the principal amount and the interest earned are tax-free. There is no need to pay tax so that the savings will be more.
- The account holder can transfer the principal money along with interest earned to his or her residence country.
- The interest rate that is provided in NRE fixed deposit account is higher than the normal account interest rate.
- Here one also gets an option to open a joint account with another Non-Resident Indian.
- NRE fixed deposit offers flexible tenure. The NRI can choose any tenure from a minimum of one year to a maximum of 10 years.
To open an NRI fixed deposit account, the applicant must provide several documents to the bank. The list of documents that are needed are given below:
- Proof of identity
- Photocopy of PAN
- Residential Proof
- Photocopy of passport
- FATCA Form
Some factors about fixed deposit account for NRIs
While going to open an NRE fixed deposit account, one must keep in mind some factors. They are:
- All applicants should remember that this account only can be opened as the specific fixed deposit offered by only Indian corporates and housing finance companies.
- The fund that will be deposited in the NRE fixed deposit account should be from NRO or Non-Resident Ordinary bank account and not from NRE or Non-Resident External bank account.
- At the term of maturity, the earned corpus will be credited to the NRO account only.
- The deposition will be done with foreign currency as it will be debited from an NRO account. Still, at the time of deposition, it will be converted into Indian currency, and the interest rate will be given on the Indian currency.
- It is an Indian Rupee account.
- The interest rate offered by the HFCS or Housing Finance companies is higher than the interest rate offered by the banks.
The interest rate offered for a fixed deposit account usually is higher than the interest rate of a normal account. Different banks offer different interest rates. The interest rate also depends on tenure. Here we are giving a list of the top eight banks that are offering the highest interest rate.
Apart from these banks, there are several reputed banks, such as SBI, PNB, BOI, HSBC, Citi Bank, Indian Overseas Bank, etc along with small finance banks such as ESAF Small Finance Bank, AU Small Finance Bank which are offering a fixed deposit with attractive interest rate. Choose the best one according to your needs.