A Comprehensive Guide to NRI Fixed Deposits and Accounts in India

NRI is a Non-Resident Indian. AN INDIAN CITIZEN who lives less than 182 days in INDIA in a financial year is known as a Non-Resident of India.

NRI needs to have a PAN card to invest in India. A PAN card is a Personal account number that is issued by an income tax department because an NRI needs to pay a tax on the income they have generated from India. The income is in the form of interest on a fixed deposit.

Basically, who can open the NRI ACCOUNT?

Any person who lives in any country other than Pakistan or Bangladesh can be an NRI holder. There are three types of accounts that one NRI can open,

1. Non-resident (External) rupee account (NRE ACCOUNT).

2. Non-resident (ordinary) rupee account (NRO ACCOUNT).

3. Foreign currency (NON-RESIDENT) account (FCNR ACCOUNT).

NON-RESIDENT (EXTERNAL) RUPEE ACCOUNT (NRE ACCOUNT)

It is the account that is maintained by the bank. Interest that is credited to this account is free from tax. Funds are acceptable from abroad in Indian currency as it is a bank account that can be opened by NRI only. This account can be opened in any form, Savings account, current account, or fixed account. The balance of the account is transferable to NRI’s country. This account can be opened jointly with the other NRIs. All the funds that are in this account are in Indian currency only.

NON RESIDENT (INTERNAL) RUPEE ACCOUNT (NRO ACCOUNT)

This account can be opened in any type like savings account, term deposit, current account, special term deposit, or can be in recurring deposit.

This account is popular among non-resident Indians as it manages the deposits or income earned In India such as dividends, pensions, rent, etc. The balance in this account can be in Indian currency or can be in foreign currency but the amount that is withdrawn from these accounts can only be in Indian currency. One can have this account jointly with some other NRI. The interest earned in this account is subject to tax deducted at source (TDS).

This account is repatriable which means, its funds can not be sent back to the NRI’S country, and also its balance is not transferable in any other currency.

FOREIGN CURRENCY (NON RESIDENT) ACCOUNT (FCNR ACCOUNT)

This kind of account is opened for depositing the income earned overseas. The balance of the account is in foreign currency. The account holder doesn’t need to pay tax. These kinds of bank accounts can be open for a tenure of 1 year to 5 years. The interest on this account is payable after 1 year and interest is not paid if the deposit is prematurely withdrawn before the completion of time. The funds in this account are repatriable which means these funds can be sent back to the NRI’s holder country.

FIXED DEPOSIT

It is the sum that is blocked for some time and the rate of interest which is generally more than that of a savings account. The rate of interest generally differs from 4.5% to 6.0%. which is more than of savings account and the rate of interest may vary from bank to bank.

NRI’S FIXED DEPOSIT

NRI FD¹ is the type of account that allows a Non-resident Indian to invest in India through a bank account. This is basically to enjoy a higher rate of return on investments from India. The payment is through cheque or RTGS/NEFT from the NRO bank account. This doesn’t allow payment through Debit cards, or UPI payments.

RATE OF RETURN ON THE NRI’s FIXED DEPOSIT

The minimum deposit is RS. 25,000.

The rate of return for Non-resident (external) rupee account holders can have is 5.65%.

The rate of return for Non-resident (internal) rupee account holders can have is 6.10%.

The rate of return to Foreign currency (non-resident) account holder can have is 6.50%.

Wrapping Up!!

This can be concluded that any person who lives less than 182 days in India, is known as a Non-Resident Indian. NRI can invest the amount of money in India to enjoy a higher rate of return. For investing in India, the NRI needs to have a bank account in any of the following three accounts as, Non-resident rupee account (external), Non-resident rupee account (internal) and Foreign currency account (non-resident). There are many benefits available for NRI for investing in India. The rate of return differs from bank to bank and from financial institution to other financial institutions. Also most important, an NRI needs to have a PAN card for investing in India.