Non-Resident Indians (NRIs) have multiple options when it comes to fixed deposits in India. Each type of deposit offers unique features and benefits. In this blog, we’re diving into the latest interest rates for NRE FDs, NRO FDs, FCNR deposits, and GIFT City (IFSC) FDs across top banks like SBI, HDFC Bank, ICICI Bank, and Axis Bank. We’ll also break down the tax implications for each type, making it easy for you to understand what works best for your money.
NRE (Non-Resident External) Fixed Deposits
An NRE fixed deposit is a term deposit where an NRI invests foreign currency (remitted from abroad), which is then held in Indian Rupees. Interest earned on NRE term deposits is exempt from Indian income tax, making these FDs very attractive. However, NRE deposits have a minimum tenure of 1 year (no interest is paid on premature withdrawal before 1 year)
Current Interest Rates of NRE FDs
As of early 2025, major banks are offering competitive annual interest on NRE FDs of 1 to 5-year tenures. This is significantly higher than NRE savings accounts and reflects the prevailing domestic deposit rates.
If you're looking to make the most of your savings, NRE Fixed Deposits are an excellent choice, offering competitive interest rates that significantly outpace regular savings accounts. With major banks currently providing rates between 6.5% and 6.9% for tenures ranging from 1 to 5 years, it's a great opportunity to grow your wealth securely.
For a more detailed comparison and to find the best rates instantly, explore Belong's NRI FD Comparison Tool. Your one-stop destination for regularly updated interest rates across top banks.
Tax Implications on NRE FDs
NRE FDs enjoy complete tax exemption in India - both the interest and principal are tax-free and fully repatriable. No TDS is deducted on NRE interest.
Note: The tax-free status holds while you are an NRI; if you later become a resident, interest may become taxable.
This means the entire interest income from an NRE deposit is yours to keep, making it very efficient. In addition, the NRE FD amount and interest can be freely sent back abroad.
NRO (Non-Resident Ordinary) Fixed Deposits
An NRO fixed deposit is the recommended option for NRIs who wish to deposit income earned in India, such as rent, dividends, or Indian salary( in rupees). NRO FDs can be opened for short periods (even 7 days) up to 10 years, just like regular resident FDs. Interest rates on NRO FDs are the same as domestic FD rates offered to residents.
Actually, banks usually consolidate their domestic/NRO interest rate schedule. For NRIs, this translates to 1- 5 year NRO deposit rates being the same as the NRE. The key difference lies not in the interest rate, but in liquidity and taxation.
NRO vs NRE
Unlike NRE accounts, NRO funds are not fully repatriable. Up to $1 million per financial year of the principal can be remitted abroad, due to RBI limits.
Current Interest Rates
To easily compare the latest NRO FD rates across top banks and find the best fit for your needs, check our NRI FD Comparison Tool. It’s your one-stop solution for real-time interest rates and smarter savings decisions.
Tax Implications
Interest earned on NRO deposits is fully taxable in India. Banks deduct TDS (tax deducted at source) at 30% on NRO FD interest for NRIs. This is a flat withholding (plus surcharge/cess as applicable) since NRO interest is considered Indian income.
The returns on your FDs are taxed according to your tax slab. You can claim a refund by filing your income tax return for a particular year. You can also claim a refund if your country of residence has a Double Taxation Avoidance Agreement (DTAA) with India.
Unlike the NRO, interest on NRE/FCNR is tax-free. Keep this in mind when estimating net returns: an NRO FD at 7% interest really yields ~4.9% post-tax (unless you repatriate under $1 million with taxes paid abroad under treaty arrangements).
FCNR Deposits (Foreign Currency Non-Resident)
FCNR (B) deposits allow NRIs to keep money in India in a foreign currency denomination. You deposit, say, USD, GBP, EUR, etc., and earn interest in that same currency. This protects your money from INR depreciation - your principal and interest don’t get converted to rupees. FCNR accounts can be held for 1 to 5 years, and are fully repatriable like NRE accounts. Importantly, interest earned on FCNR deposits is also tax-free in India, just like NRE interest.
Current Interest Rates
To explore the best FCNR deposit rates and find the most rewarding options, visit our FD Comparison Tool. It provides real-time interest rates across major banks, helping you make an informed choice.
Tax Implications
FCNR interest is exempt from tax in India (no TDS) - the situation is similar to NRE accounts. This tax-free status holds as long as you maintain NRI status or RNOR status. If you return to India and lose NRI status, you usually can convert FCNR to RFC (Resident Foreign Currency) account, interest on RFC may stay tax-free for a defined period (typically while you are RNOR). This makes FCNR a convenient option for NRIs who don’t want any Indian tax hassle, though you should consider tax on such interest in your country of residence.
GIFT City Fixed Deposits
GIFT City fixed deposits are the newest player on the block. GIFT City is treated as an offshore financial zone. Banking in GIFT City is conducted in foreign currency and falls under a separate regulator (IFSCA). NRIs can open foreign currency savings and term deposits in GIFT City; these are like FCNR deposits but placed with the bank’s IFSC branch instead of the domestic branch.
GIFT City FDs offer flexible tenures (shorter than 1 year) and sometimes slightly higher interest rates than regular FCNRs, since they are free from some domestic banking constraints.
Current Interest rates
If you're seeking an innovative way to grow your savings, GIFT City Fixed Deposits are worth exploring. To easily compare the latest GIFT City FD rates and secure the best deal, head over to our FD Comparison Tool. It's your gateway to real-time rates and smarter financial decisions.
Tax Implications
In other words, interest from GIFT City FDs is tax-free in India, just like NRE/ FCNR interest. There is no TDS deduction on interest earned. This gives GIFT City deposits an edge, effectively combining the no-tax advantage of NRE/FCNR with the flexibility of multiple currencies and short tenures. Do note that GIFT City accounts are considered offshore, allowing you to fund your account from your foreign bank or your Indian bank account.
Also, they operate in foreign currency only (no INR deposits), so they are mainly an alternative to FCNR for those who want to hold foreign currency assets while earning interest.
Final Tips for Choosing the Best NRI Fixed Deposit
Each FD type has its strengths: Choose NRE if you want tax-free growth in INR, go for NRO if you’re earning in India and want higher FD rates. Go with FCNR to avoid currency risks and want to hold foreign currency. Explore GIFT City FDs if you want the benefits of FCNR with shorter tenures and potentially higher returns.
You must select according to your preference for currency exposure, liquidity requirements, and tax situations. Always cross-check the current rates with the bank prior to investment, as rates may fluctuate based on RBI policy and market conditions.
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