Non-Resident External or NRE Account can be a Savings, Recurring or Fixed Deposit Account where NRIs can deposit their foreign currencies which are remitted to an Indian Account. An NRE account is held in Indian Rupees and is completely tax-free in India. In this article, we will discuss how you can select the most suitable NRE fixed deposit and will also give you the best NRE FD rates by different banks in India.
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6.5%INTEREST ON FD
NRIs cannot open a regular account that is designed for Indian Residents as per the guidelines by Foreign Exchange Management Act (FEMA) and this can attract huge penalties if breached. Also, no interest is earned if the account is closed within a year.
An NRE Fixed Deposit Account holder has the following benefits –
*DICGC – Deposit Insurance and Credit Guarantee Corporation
Below is a table that compares NRE Account FD Rates across all the banks for 1 – 5 years :
| Name of the Bank | Tenure | |||
| 1 year | 2 years | 3 years | 5 years | |
| SBI | 5.10% | 5.20% | 5.45% | 5.50% |
| Yes Bank | 5.75% | 6.00% | 6.25% | 6.25% |
| HDFC Bank | 5.00% | 5.00% | 5.20% | 5.45% |
| ICICI Bank | 5.00% | 5.00% | 5.20% | 5.45% |
| PNB | 5.00% | 5.00% | 5.10% | 5.25% |
| Axis Bank | 5.10% | 5.40% | 5.40% | 5.75% |
| Canara Bank | 5.00% | 5.10% | 5.25% | 5.25% |
| Kotak Mahindra Bank | 5.10% | 5.20% | 5.40% | 5.50% |
| Bank of Baroda | 4.90% | 5.00% | 5.10% | 5.25% |
| Bank of India | 5.00% | 5.05% | 5.05% | 5.05% |
| IDBI Bank | 5.05% | 5.15% | 5.40% | 5.50% |
| Indusind Bank | 6.00% | 6.50% | 6.50% | 6.50% |
| Central Bank of India | 5.00% | 5.10% | 5.10% | 5.15% |
| Citibank | 2.75% | 3.00% | 3.50% | 3.50% |
| Indian Overseas Bank (iob) | 5.20% | 5.25% | 5.25% | 5.25% |
| Oriental Bank of Commerce (obc)* | 5.00% | 5.00% | 5.10% | 5.25% |
| DBS Bank | 4.50% | 3.35% | 4.35% | 4.35% |
Interest rates updated on 22th feb 2022. (Applicable to deposits of less than Rs 2 crore)
* Oriental Bank of Commerce and United Bank of India have been merged with Punjab National Bank, effectively from 1st April 2020. Therefore, updated rates will mirror with PNB NRE FD Rates.
FDs of up to ₹5 lakhs insured by RBI
No hassle of opening a saving account
No documentation
Our government has licensed some companies to operate as financial institutions, small finance banks for example. Though not a scheduled commercial bank, these institutes are very niche in operations Fixed deposit is one of the services offered by Small Finance Banks. Down below are some small finance banks that provide the best interest rates for an NRE FD Account.
| Small Finance Bank | Tenure/ FD Interest Rates | |||
| 1 year | 2 years | 3 years | 5 years | |
| AU Small Finance Bank | 5.00% | 6.10% | 6.35% | 6.10% |
| ESAF Small Finance Bank | 6.50% | 6.25% | 5.75% | 5.25% |
| Equitas Small Finance Bank Limited | 6.00% | 6.25% | 6.35% | 5.25% |
| Ujjivan Small Finance Bank | 6.50% | 6.25% | 6.50% | 6.25% |
Interest rates updated on 22th feb 2022
Who Should I Invest in NRE Fixed Deposit?
We see that it is very tough to choose from, especially when each is better on its own. But there are certain factors you must keep in mind while going forward such as interest rate and a trustworthy long-term relationship with the bank. Also, you must check if the account can be operated from the country you live in right now. Some major banks have branches in countries like the USA, UK, and the Middle East.
Suggested Read: NRE vs NRO vs FCNR
44 Comments
Hi What about doing a small FD with Indusind bank starting with smaller amount for the long year in term of AED to Indian rupees . How your rate the bank in scale of security,return & value for money.Please guide
Hi Vivek,
When talking about fixed deposits, it should always be kept in mind that the security of your money is the prime concern here. IndusInd Bank is a scheduled bank and is regulated by the Reserve Bank of India. You can definitely start with a small FD with the bank. The returns are decent but guaranteed. Should anything happen to the bank, you will get an insurance compensation of up to Rs. 5 lakh by the DICGC. Therefore, a small FD, below Rs. 5 lakh would be a safer option for you. If you’re a returning NRI, go for NRO account and if you’re an NRI, the best option would be to put your money in FCNR since there is no forex-related risk and thus, no loss of value.
Is it safe to invest in small finance bank? Like Fds
Small finance banks are scheduled banks and are regulated by RBI. Also, deposits made in these banks are covered for up to Rs. 5 lakh under the DICGC deposit insurance. Therefore, these banks are safe. If the bank does in fact defaults, you will be given an amount of up to Rs. 5 lakh. Thus, we advise that you do not keep more than Rs. 5 lakh in one bank and spread it across banks for proper coverage and better returns.
Is NRI FD in bank of Baroda safe or any better and safe investment for NRI.
Thanks
Hi Sudhir,
Yes, having an NRI Fixed Deposit account with Bank of Baroda is a safe option. Bank of Baroda is one of the top Indian banks with an international presence. However, it is still recommended to do your research thoroughly before making the final call.
what is the insurance of NRE FD in US Dollars?
Hi Jay,
For NRE FDs, this amount of Rs. 5 lakh by the DICGC will be converted into US Dollar as per the prevailing exchange rates.
E.g as per current rates, Rs. 5 lakh will amount to USD 6608.95.
Hey, I think keeping FD in banks are not safe as per the latest Banking deposit Insurance is only Rs. 100000 and if anything goes wrong in banking sector then the depositor will get only Rs.100000. What is the safest instrument which i can purchase which can fetch fixed yearly income?. Is LIC fixed deposit scheme is risk free? Need ur valuable suggestion
Financial institutions having AAA rating provided by CRISIL are considered to be safer options for investing in a fixed deposit. LIC Housing Finance is also quite a safe option. When investing in a bank FD, an amount of up to R.s 1 lakh is insured therefore, in case of a mishap, the bank shall repay this amount.