Things NRIs must know before investing in an NRE Fixed Deposit Account

Things NRIs must know before investing in an NRE Fixed Deposit Account

According to the World Bank’s latest Migration and Development Brief, India has been recognised as the top recipient of remittances, with the country receiving a whopping $79 billion as remittances in 2018! However, a large chunk of this amount is often kept in savings accounts, which inevitably translates to low returns. Here’s where fixed deposits come into play.

Bank FDs are low-risk investment instruments that allow you to grow your wealth substantially over a fixed period of time. And similar to how an Indian citizen can opt for domestic FDs, NRIs (Non-resident Indians) too have dedicated FD accounts through which they can earn higher than a savings account.

NRE and NRO fixed deposits: The basic differences

For Non-resident Indians, there are two types of accounts they can open with Indian banks—Non-resident External accounts (NRE) and Non-resident Ordinary accounts (NRO).

NRE FDs are beneficial for those earning in a foreign currency and who would like to get the amount converted to the value of Indian currency. Some of the major highlights of an NRE FD account are that the interest earned is tax-free and both the principal and the interest amount are completely repatriable. Do consider that the money deposited is subject to currency rate fluctuations, and also that NRE joint accounts can only be opened with another NRI.

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