A Fixed Deposit is a lucrative and safe option that allows you to grow your money. While general FDs cater to domestic consumers, as a non-resident Indian living and working abroad, you can choose an NRI FD to deposit your money and earn a higher interest. This financial product is provided by most banks across the world and there is more than one NRI FD you can choose from.
What is it?
An NRI FD is a safe and popular investment option that locks away a sum of money for a pre-determined tenure. This allows you to invest your hard-earned money in it and get an interest that is comparatively higher than a typical Savings Account. Some of the common features of NRI FDs include:
- They provide NRIs with an option to invest their money securely.
- Some NRI FDs may offer completely tax-free returns. Hence, you need not shell your investment by paying taxes.
- You can enjoy the possibility of high returns courtesy of competitive NRI FD rates.
- These FDs are open to NRIs, Persons of Indian Origin, and Overseas Citizens of India.
- They provide a nomination option.
- You can open an NRI FD jointly with another account holder.
- They offer you multiple options to invest your money.
Types
Broadly, there are three FDs offered to NRIs. These include the following:
- Non-Resident External or NRE Deposit
- Non-Resident Ordinary or NRO Deposit
- Foreign Currency Non-Resident or FCNR Deposit
NRE Fixed Deposit
As an NRI, naturally you would earn in foreign currency. However, if you want to grow these earnings, you can opt for an NRE FD Account and deposit your money there. When you transfer the foreign currency to this Deposit Account, it automatically gets converted into Indian Rupee. The investment that you make is then maintained in INR throughout the tenure of the deposit.
The interest earned on these deposits is completely tax-free and both the principal amount and interest that you earn are fully repatriable.
NRO Fixed Deposit
You can opt for an NRO Deposit when you have earnings that originate domestically in India, for instance, you earn rental income on a property you have in India. The interest that you earn on these FDs is taxable. However, you can open such a Deposit Account jointly with another NRI or a resident Indian.
FCNR Fixed Deposit
Commonly called an FCNR Account, this FD allows you to deposit your foreign currency earnings. You can deposit funds across various foreign currencies approved by your bank. The amount you deposit and the interest you earn on it is maintained in the original foreign currency. The interest earned on your investments in such an FD is completely tax-free. Moreover, the principal amount and interest are fully repatriable.
