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
How about IndusInd Bank? Is it safe. I can see this bank is giving highest interest rate.
Yes, IndusInd Bank is safe. Deposits made in this bank are covered under the DICGC insurance of up to Rs 5 lakh. Read more about DICGC bank deposit insurance here.
Dear Team Paisabazaar,
Is it safe to maintain Multiple big NRE FDs in Kotak Mahindra bank. If not, then what is the procedure to transfer the funds to different NRE to NRE accounts with other banks, once the account has been opened in e.g. SBI, IOB, PNB…etc.?
Also, please let me know, is it safe to maintain your funds in multiple NRE accounts below rs 5 lakh in different banks so as to avail individual coverage of Rs. 5 lacs from each bank account.
Thanks for your valuable feedback.
Hi Rahul,
Kotak Mahindra Bank is closely regulated by the Reserve Bank of India, thus your money is most likely to remain safe. However, for your satisfaction, you can check the net Non-Performing Assets of the bank to check the financial health. This information is easily available on the bank’s official website.
However, if you wish to transfer your funds from one bank to another, it can easily be done. Such transfers are allowed and simple to do as the funds are maintained in Indian Rupee. Some details may differ from bank to bank, thus we advise you to contact the bank in which you currently have the account.
Also, it is a good practice to maintain multiple NRE accounts to have better deposit insurance coverage.
Hope it helps.
Thanks for reaching out.
Hi Is it safe to put FD in RBL bank? Pl give me a valuable comment. Also how can we book FCNR when remittance and conversion of money is already done indian rupee ??
Hi Anil,
RBL is a scheduled commercial bank (private sector) bank in India, thus the deposits made in it are covered up to Rs. 5 lakh by the deposit insurance by DICGC.
For FCNR, deposits must only be made in a permitted foreign currency.
I would like to know that, whether it is safe to put deposit in Federal bank? Please advise.
Hi Sunu,
Federal Bank is a scheduled commercial bank in the private sector. It is regulated by the Reserve Bank of India. The bank has an A1+ CRISIL rating on short term debt programmes. Also, the deposits made in it are included in the deposit insurance by DICGC.
Is the DICGC insurance per FD or the total amount? For example, if I have 2 FDs each worth 5 lacs, am I fullyt covered or only up to 5 lacs..
Deposit insurance by DICGC covers all the deposits you have in a bank. If you have 2 FDs of Rs. 5 lakh each in one bank, e.g. Yes Bank, then you will be given a compensation of Rs. 5 lakh if the situation comes. However, if you have 2 FDs (Rs. 5 lakh each) in 2 different banks, then you will get separate coverage of Rs. 5 lakh each.