What Factors Influence NRI Savings Account Interest Rates?

When you move overseas, you need to undergo various formalities. Apart from lifestyle changes, you also need to swap your banking ways. This includes converting your regular Savings Account into a Non-Resident Indian Savings Account. Doing so is mandatory if you wish to continue using your previous account. An NRI Savings Account is a Rupee denominated account.

It allows you to park your foreign earnings once you move from India. Like a regular Savings Account, you earn tax-free interest on your deposits. But what factors influence the interest rate on such accounts? The following are a few for your reference:

  1. Banking partner

Your banking partner is vital in determining your interest rates. If you have a reliable one, you can obtain higher rates. It also boils down to their policies and interest rate structure. Hence, it is best to compare the offerings of different banks to get the best NRI Account interest rates.

  1. Government policies

Banks and financial institutions may lower or increase their interest rates based on government policies. Such changes are usually made for a straightforward reason. NRI Account interest rates should compete with other returns in the market. Ideally, central banks and the government support low rates. It pushes the interest rates earned everywhere else in the economy artificially.

  1. Demand & Supply

The demand and supply for a Savings Account also affect NRI Savings Account interest rates. Most of such accounts are liquid accounts that safeguard the value of principal maintained by the bank. Consumers usually prefer Savings Accounts for safety and flexibility. Hence, banks provide them to urge holders to deposit extra cash. That way, bankers get the opportunity to make loans.

When banks want extra deposits, they increase the interest rates on NRI Account. Similarly, they lower the same when they want to reduce bank debits.

  1. Minimum balance

Every Savings Account mandates the holder to maintain a minimum balance. The same applies to an NRI Savings Account. This factor dictates your interest rate to a certain extent. For instance, you open an NRE Savings Account with XYZ bank. You opt for a relatively low minimum balance. In this case, your NRE Savings Account interest rates will also be less.

If you wish to obtain high interest rates, increasing your minimum balance requirement is advisable. However, you must also be mindful of your budgeting. You want to go for a feasible amount based on your financial situation.


Besides these factors, several others also come into play regarding your interest rates. Hence, you must conduct your own research to optimise your interest earnings.

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