Difference between NRE and NRO Fixed Deposits

The Non-Resident External (NRE) Account and the Non-Resident Ordinary (NRO) Account are non-resident Indians two most popular banking options. The NRE Account is for foreign currency, while NRO Account is for rupees. NRIs open and operate a Bank Account outside India in many ways.

Non-Resident Ordinary (NRO) Fixed Deposits

Due to their excellent yields, relative safety, and convenience of access, bank FDs have long piqued the attention and participation of NRIs in India. The NRO Fixed Deposit has the following features:

  • NRO Fixed Deposit online are best for NRIs who have a steady income stream coming from India. These include rent, commissions, or fees, among other things.
  • No principal gets repatriated because it is a rupee account, but interest gets sent outside up to a certain amount. These NRO FDs are held in a joint account with an Indian resident.
  • As compared to Current and Savings Bank Account rates, NRO FD interest rates are relatively attractive.

The NRO FD rates vary between banks, and different customers get charged at different rates. Before you open NRO FD Account, confirm the rates. You need to deposit a minimum of Rs.1 lakh. Remember that NRO FDs are resident deposits, and the interest earned is fully taxable at the applicable peak rates. If the interest generated in a given financial year exceeds Rs.10 lakh, they are subject to an additional 10% fee.

Non-Resident External (NRE) Fixed Deposits

NRE FDs are typically foreign currency accounts that you can withdraw at any time. Unlike Foreign Currency Non-Resident Deposit (FCNR), which gets done in Dollars, Pounds, Euros, or Yen, the NRE Account is held in Rupees. NRE Account has funds from outside India. Here are some of the essential characteristics:

  • NRE FDs are a good option for a reliable income source and create a safe investment.
  • NRE FDs come in different terms ranging from a year to 10 years, and banks frequently issue Loans and Overdrafts in exchange for them.
  • Under NRE FDs, most banks offer maximum and minimum deposit amounts, and banks also provide long-term NRE FDs with a five-year lock-in period for Section 80C tax benefits.
  • NRE FDs offer higher interest rates than NRO FDs, but the depositor bears the foreign currency risk.

When compared to NRO FDs, the NRE FD rates varies significantly but is more consistent. The primary benefit is that the interest collected under NRE FD is tax-free in the depositor’s hands.

Comments are closed