Non-Resident Ordinary (NRO) and Non-Resident External (NRE) accounts are essential tools for NRIs to manage their finances in India. These Indian Rupee denominated accounts allow you to benefit from the high interest rates on Indian bank deposits in a stable banking environment.
The suitability of NRO vs NRE Fixed Deposits (FD) can be determined based on how you wish to fund the principal amount and where you’d like to eventually use the money. If you are investing your Indian income, NRO FDs would be more suited. If you’re looking to invest your foreign income in Indian bank deposits, NRE FDs would be ideal.
NRE FDs also allow you to freely repatriate your principal as well as interest back to your foreign country of residence. NRO FDs, however, come with some limitations of how much money you are allowed to transfer out of India. Let’s discuss both these options in more detail below, including how they are taxed.
What is a Non-Resident Ordinary (NRO) Fixed Deposit?
NRO FDs are typically linked to your NRO Savings Accounts in India. These deposits are held in India and in Indian rupees. They are tailored to help you grow your Indian income, such as rent from property, dividends, or any interest income. Indian banks offer attractive rates of interest on NRO FDs and the interest rate varies depending on the desired tenure.
Key Features of NRO Fixed Deposits
- Available NRO FD tenure options can range from 7 days to 10 years depending on the bank.
- NRO FDs can be booked using existing funds in your NRO bank accounts. You can also transfer funds from your NRE to your NRO account for this purpose.
- NRO FDs can be jointly held with another NRI and also with a Resident Indian (on ‘’former or survivor’’ basis)
- Overdraft facility can generally be availed against NRO FDs in an NRO (savings/current) account.
- NRO FDs can be repatriated abroad within the limit of USD 1 million per financial year for all NRO funds, as set by FEMA (Foreign Exchange Management Act).
Tax Implications of NRO Fixed Deposits
The interest earned on NRO FDs is subject to income tax in India. The interest earned is fully taxable as per the applicable tax slab. The bank will deduct TDS (Tax Deducted at Source) of 30% (plus applicable surcharge & cess) on the interest earnings. Any excess TDS deduction can be claimed as a refund by filing your Income Tax Return (ITR) in India. Depending on the specific DTAA (Double Taxation Avoidance Agreement) between India and your country of residence, you may qualify for a lower tax and TDS rate. If so, you can submit Form 10F to your bank to adjust the TDS deduction accordingly.
What is a Non-Resident External (NRE) Fixed Deposit?
Similar to NRO FDs, NRE FDs are also held in Indian rupees. They differ significantly, however, in their repatriability and tax treatment. These are typically funded through your foreign income, although you may also fund it using your NRO account income (with certain restrictions on the source of such income, and within the annual limit of USD 1 million). These deposits offer attractive rates of interest, often at par with domestic deposits, and are a great addition to your debt/fixed income portfolio in India.
Key Features of NRE Fixed Deposits
- NRE FD tenure ranges from a minimum of 1 year to a maximum of 10 years depending on the bank. The minimum of 1 year is set by the RBI.
- NRE FDs can be set up by remitting your foreign income to your NRE savings account with the corresponding bank. You can also fund it using money from your NRO account (up to USD 1 million per year, post payment of applicable taxes, across all your accounts), provided that money falls under the ‘current income’ category which includes, rent, interest, dividend and pension.
- NRE FDs can also be held jointly with another NRI or a Resident Indian who is a ‘close relative’ (parent, sibling, spouse, child etc).
- Overdraft facility is typically also available for NRE FDs.
- NRE FDs are fully repatriable (both principal and interest) abroad without any limitations.
Tax Implications of NRE Fixed Deposits
NRE FDs (both principal and interest) are fully exempt from income tax in India. There is no applicable TDS either. They may, however, be taxed in your foreign country of residence. Make sure to check the compliance requirements with a tax professional, including any applicable DTAA provisions.
NRO and NRE Fixed Deposit Interest Rates
Interest rates offered by banks are subject to change from time to time. You can refer to the banks' official website or contact your local branch to learn the current applicable rates, including for deposits above INR 3 Crore. The NRO and NRE FD rates from various Indian banks for deposits up to INR 3 Crores published here are current as of the publishing of this blog on September 10, 2024:
Bank | 3M | 6M | 1 year | 2 years | 3 years | 5 years | 10 years | Special tenure |
State Bank of India | 5.50% | 6.25% | 6.80% | 7.00% | 6.75% | 6.50% | 6.50% | 7.25% (444 days) |
Bank of India | 4.50% | 6.00% | 6.80% | 6.80% | 6.50% | 6.00% | 6.00% | 7.25% (333 days) |
HDFC Bank | 4.50% | 4.50% | 6.60% | 7.00% | 7.00% | 7.00% | 7.00% | 7.40% (55 months) |
ICICI Bank | 4.50% | 4.75% | 6.70% | 7.25% | 7.00% | 7.00% | 6.90% | - |
Axis Bank | 4.75% | 5.75% | 6.70% | 7.10% | 7.10% | 7.00% | 7.00% | - |
Kotak Mahindra Bank | 3.50% | 7.00% | 7.10% | 7.15% | 7.00% | 6.20% | 6.20% | 7.40% (390 days) |
IndusInd Bank | 4.75% | 5.00% | 7.75% | 7.75% | 7.25% | 7.25% | 7.00% | 7.99% (16-18 months) |
Yes Bank | 4.10% | 5.00% | 7.25% | 7.25% | 7.25% | 7.25% | 7.00% | 8.00% (18 months) |
HSBC Bank | 3.80% | 4.50% | 4.00% | 4.25% | 7.00% | 6.00% | - | 7.50% (601-699 days) |
Indian Public Sector Banks
State Bank of India
SBI allows premature withdrawal of both NRO and NRE FDs. However, based on the amount of the FD, interest payable will be 0.5% to 1% below the applicable rate for the tenure. No interest is paid on NRO FD withdrawals within 7 days, and NRE FD withdrawals within 1 year. These rates are current as on Sept 10, 2024. Latest rates can be viewed here.
Deposit Tenure | NRO Deposit Rate | NRE Deposit Rate |
7 to 45 days | 3.50% | - |
46 to 179 days | 5.50% | - |
180 to 210 days | 6.25% | - |
211 to < 1 year | 6.50% | - |
≥ 1 year to < 2 years | 6.80% | 6.80% |
400 days (Amrit Kalash valid till 30th Sept 2024) | 7.10% | 7.10% |
444 days (Amrit Kalash) | 7.25% | 7.25% |
≥ 2 years to < 3 years | 7.00% | 7.00% |
≥ 3 years to < 5 years | 6.75% | 6.75% |
≥ 5 years to 10 years | 6.50% | 6.50% |
Bank of India
Bank of India allows premature withdrawal of both NRO and NRE FDs. However, based on the amount of the FD, interest payable will be 0% to 1% below the applicable rate for the tenure. No interest is paid on NRO FD withdrawals within 7 days, and NRE FD withdrawals within 1 year. These rates are current as on Sept 10, 2024. Latest rates can be viewed here.
Deposit Tenure | NRO Deposit Rate | NRE Deposit Rate |
7 to 14 days | 3.00% | - |
15 to 30 days | 3.00% | - |
31 to 45 days | 3.00% | - |
46 to 90 days | 4.50% | - |
91 to 179 days | 4.50% | - |
180 to210 days | 6.00% | - |
211 to 269 days | 6.00% | - |
270 days to < 1 year (except 333 days) | 6.00% | - |
333 days | 7.25% | - |
1 year | 6.80% | 6.80% |
> 1 year to < 2 years | 6.80% | 6.80% |
2 years | 6.80% | 6.80% |
> 2 years to < 3 years | 6.75% | 6.75% |
≥ 3 years to < 5 years | 6.50% | 6.50% |
≥ 5 years to < 8 years | 6.00% | 6.00% |
≥ 8 years to ≤ 10 years | 6.00% | 6.00% |
Private Sector Banks
HDFC Bank
HDFC Bank allows premature withdrawal of both NRO and NRE FDs. In case of premature withdrawal for NRO FDs, interest payable will be 1% below the applicable rate for the tenure. No interest rate penalty applies to premature withdrawal of NRE FDs. No interest is paid on NRO FD withdrawals within 7 days, and NRE FD withdrawals within 1 year. These rates are current as on Sept 10, 2024. Latest rates can be viewed here.
Deposit Tenure | NRO Deposit Rate | NRE Deposit Rate |
7 to 14 days | 3.00% | - |
15 to 29 days | 3.00% | - |
30 to 45 days | 3.50% | - |
46 to 60 days | 4.50% | - |
61 to 89 days | 4.50% | - |
90 days to ≤ 6 months | 4.50% | - |
> 6 months to ≤ 9 months | 5.75% | - |
> 9 months to < 1 year | 6.00% | - |
≥ 1 year to < 15 months | 6.60% | 6.60% |
≥ 15 months to < 18 months | 7.10% | 7.10% |
≥ 18 months to < 21 months | 7.25% | 7.25% |
≥ 21 months to ≤ 2 years | 7.00% | 7.00% |
> 2 years to < 2 year 11 months | 7.00% | 7.00% |
2 years 11 months (35 months) | 7.35% | 7.35% |
> 2 years 11 months to ≤ 3 years | 7.00% | 7.00% |
> 3 years to < 4 years 7 months | 7.00% | 7.00% |
4 years 7 months (55 months) | 7.40% | 7.40% |
> 4 years 7 months to ≤ 5 years | 7.00% | 7.00% |
> 5 years to ≤ 10 years | 7.00% | 7.00% |
ICICI Bank
ICICI Bank allows premature withdrawal of both NRO and NRE FDs. In case of premature withdrawal for NRO FDs, interest payable will be 0.5% to 1% (based on the original tenure of the deposit) below the applicable rate for the tenure. In case of premature withdrawal for NRE FDs, interest payable will be 1% below the applicable rate for the tenure. No interest is paid on NRO FD withdrawals within 7 days, and NRE FD withdrawals within 1 year. These rates are current as on Sept 10, 2024. Latest rates can be viewed here.
Deposit Tenure | NRO Deposit Rate | NRE Deposit Rate |
7 to 14 days | 3.00% | - |
15 to 29 days | 3.00% | - |
30 to 45 days | 3.50% | - |
46 to 60 days | 4.25% | - |
61 to 90 days | 4.50% | - |
91 to 120 days | 4.75% | - |
121 to 184 days | 4.75% | - |
185 to 270 days | 5.75% | - |
271 to 289 days | 6.00% | - |
290 days to < 1 year | 6.00% | - |
1 year to 389 days | 6.70% | 6.70% |
390 days to < 15 months | 6.70% | 6.70% |
15 months to < 18 months | 7.25% | 7.25% |
18 months to ≤ 2 years | 7.25% | 7.25% |
> 2 years to ≤ 3 years | 7.00% | 7.00% |
> 3 years to ≤ 5 years | 7.00% | 7.00% |
> 5 years to ≤ 10 years | 6.90% | 6.90% |
Axis Bank
Axis Bank allows premature withdrawal of both NRO and NRE FDs. In case of premature withdrawal for NRO FDs, interest payable will be 1% below the applicable rate for the tenure if you withdraw more than 25% of the FD amount. In case of premature withdrawal for NRE FDs, no interest rate penalty is applied on the applicable rate for the tenure. No interest is paid on NRO FD withdrawals within 7 days, and NRE FD withdrawals within 1 year. These rates are current as on Sept 10, 2024. Latest rates can be viewed here.
Deposit Tenure | NRO Deposit Rate | NRE Deposit Rate |
7 - 14 days | 3.00% | - |
15 - 29 days | 3.00% | - |
30 - 45 days | 3.50% | - |
46 - 60 days | 4.25% | - |
61 days < 3 months | 4.50% | - |
3 months to 3 months 24 days | 4.75% | - |
3 months 25 days < 4 months | 4.75% | - |
4 months < 5 months | 4.75% | - |
5 months < 6 months | 4.75% | - |
6 months < 7 months | 5.75% | - |
7 months < 8 months | 5.75% | - |
8 months < 9 months | 5.75% | - |
9 months < 10 months | 6.00% | - |
10 months < 11 months | 6.00% | - |
11 months - 11 months 24 days | 6.00% | - |
11 months 25 days < 1 year | 6.00% | - |
1 year to 1 year 4 days | 6.70% | 6.70% |
1 year 5 days to 1 year 10 days | 6.70% | 6.70% |
1 year 11 days to 1 year 24 days | 6.70% | 6.70% |
1 year 25 days < 13 months | 6.70% | 6.70% |
13 months < 14 months | 6.70% | 6.70% |
14 months < 15 months | 6.70% | 6.70% |
15 months < 16 months | 7.25% | 7.25% |
16 months < 17 months | 7.25% | 7.25% |
17 months < 18 months | 7.25% | 7.25% |
18 months < 2 years | 7.25% | 7.25% |
2 years < 30 months | 7.10% | 7.10% |
30 months < 3 years | 7.10% | 7.10% |
3 years < 5 years | 7.10% | 7.10% |
5 years to 10 years | 7.00% | 7.00% |
Kotak Mahindra Bank
Kotak Mahindra Bank allows premature withdrawal of both NRO and NRE FDs. In case of premature withdrawal for NRO and NRE FDs, interest payable will be 0% to 1% (based on the original tenure of the deposit) below the applicable rate for the tenure. No interest is paid on NRO FD withdrawals within 7 days, and NRE FD withdrawals within 1 year. These rates are current as on Sept 10, 2024. Latest rates can be viewed here.
Deposit Tenure | NRO Deposit Rate | NRE Deposit Rate |
7 to 14 days | 2.75% | - |
15 to 30 days | 3.00% | - |
31 to 45 days | 3.25% | - |
46 to 90 days | 3.50% | - |
91 to 120 days | 4.00% | - |
121 to 179 days | 4.25% | - |
180 days | 7.00% | - |
181 to 269 days | 6.00% | - |
270 days | 6.00% | - |
271 to 363 days | 6.00% | - |
364 days | 6.50% | - |
365 days to 389 days | 7.10% | 7.10% |
390 days | 7.40% | 7.40% |
390 days to < 23 months | 7.40% | 7.40% |
23 months | 7.30% | 7.30% |
> 23 months to < 2 years | 7.30% | 7.30% |
≥ 2 years to < 3 years | 7.15% | 7.15% |
≥ 3 years to < 4 years | 7.00% | 7.00% |
≥ 4 years to < 5 years | 7.00% | 7.00% |
≥ 5 years to 10 years | 6.20% | 6.20% |
IndusInd Bank
IndusInd Bank allows premature withdrawal of both NRO and NRE FDs. In case of premature withdrawal for NRO and NRE FDs, interest payable will be 1% below the applicable rate for the tenure. No interest is paid on NRO FD withdrawals within 7 days, and NRE FD withdrawals within 1 year. These rates are current as on Sept 10, 2024. Latest rates can be viewed here.
Deposit Tenure | NRO Deposit Rate | NRE Deposit Rate |
7 to 14 days | 3.50% | - |
15 to 30 days | 3.50% | - |
31 to 45 days | 3.75% | - |
46 to 60 days | 4.75% | - |
61 to 90 days | 4.75% | - |
91 to 120 days | 4.75% | - |
121 to 180 days | 5.00% | - |
181 to 210 days | 5.85% | - |
211 to 269 days | 6.10% | - |
270 to 354 days | 6.35% | - |
355 to 364 days | 6.50% | - |
≥ 1 year to < 15 months | 7.75% | 7.75% |
≥ 15 months to < 16 months | 7.75% | 7.75% |
≥ 16 months to < 18 months | 7.99% | 7.99% |
≥ 18 months to ≤ 2 years | 7.75% | 7.75% |
> 2 years to < 2 years 6 months | 7.25% | 7.25% |
≥ 2 years 6 months to < 2 years 7 months | 7.25% | 7.25% |
≥ 2 years 7 months to ≤ 3 years 3 months | 7.25% | 7.25% |
> 3 years 3 months to < 61 months | 7.25% | 7.25% |
61 months and above | 7.00% | 7.00% |
YES Bank
YES Bank allows premature withdrawal of both NRO and NRE FDs. In case of premature withdrawal for NRO and NRE FDs, interest payable will be 0.75% to 1% (based on the original tenure of the deposit) below the applicable rate for the tenure. No interest is paid on NRO FD withdrawals within 7 days, and NRE FD withdrawals within 1 year. These rates are current as on Sept 10, 2024. Latest rates can be viewed here.
Deposit Tenure | NRO Deposit Rate | NRE Deposit Rate |
7 to 14 days | 3.25% | - |
15 to 45 days | 3.70% | - |
46 to 90 days | 4.10% | - |
91 to 120 days | 4.75% | - |
121 to 180 days | 5.00% | - |
181 to 271 days | 6.10% | - |
272 days to < 1 year | 6.35% | - |
1 year | 7.25% | 7.25% |
> 1 year to < 18 months | 7.50% | 7.50% |
18 months | 8.00% | 8.00% |
> 18 months to < 24 months | 7.75% | 7.75% |
≥ 24 months to < 36 months | 7.25% | 7.25% |
≥ 36 months to < 60 months | 7.25% | 7.25% |
60 months | 7.25% | 7.25% |
> 60 months to ≤ 120 months | 7.00% | 7.00% |
Foreign Banks
HSBC Bank
HSBC Bank allows premature withdrawal of both NRO and NRE FDs. In case of premature withdrawal for NRO and NRE FDs, interest payable will be 1% below the applicable rate for the tenure, plus the difference between applicable rate and original rate (if the applicable rate for the tenure is greater than the original rate). No interest is paid on NRO FD withdrawals within 7 days, and NRE FD withdrawals within 1 year. These rates are current as on Sept 10, 2024. Latest rates can be viewed here.
Deposit Tenure | NRO Deposit Rate | NRE Deposit Rate |
7 days | 2.85% | - |
8 days | 2.85% | - |
9 to 14 days | 3.00% | - |
15 to 29 days | 3.00% | - |
30 to 59 days | 3.40% | - |
60 to 89 days | 3.60% | - |
90 to 93 days | 3.80% | - |
94 days | 3.80% | - |
95 to 179 days | 4.00% | - |
180 days | 4.50% | - |
181 to 269 days | 3.25% | - |
270 to 364 days | 3.70% | - |
365 days | 4.00% | 4.00% |
366 to 399 days | 4.00% | 4.00% |
400 days | 3.25% | 3.25% |
401 days to < 18 months | 6.25% | 6.25% |
≥ 18 months to 599 days | 4.10% | 4.10% |
600 days | 3.75% | 3.75% |
601 to 699 days | 7.50% | 7.50% |
700 days | 3.75% | 3.75% |
701 to 730 days | 4.25% | 4.25% |
731 days | 4.25% | 4.25% |
732 days to < 36 months | 7.25% | 7.25% |
≥ 36 months to < 37 months | 7.00% | 7.00% |
≥ 37 months to < 48 months | 6.00% | 6.00% |
≥ 48 months to 60 months | 6.00% | 6.00% |
Conclusion
NRO fixed deposits are a great option for growing your income earned in India, and NRE deposits are well suited to invest your foreign earnings in India. NRO FDs come with attractive rates of interest and greater flexibility in tenure options, but with some tax implications and limits on repatriation. On the other hand, NRE deposits offer similar lucrative rates and the benefits of tax exemption in India and no limits on repatriation abroad, but with a longer term tenure commitment.
