NRE deposits for NRIs offer 5-7% interest rate per annum across banks in India

NRE or non-resident external deposits are deposits designed exclusively for the non-resident Indian (NRI) community. These deposits serve as a financial tool that enables NRIs to keep their foreign earnings in rupee-denominated accounts.

No TDS deduction: Interest earned on NRE deposits do not attract any tax deducted at source (TDS). Furthermore, both principal as well as interest payment are fully tax-exempt in India.

Interest rate: Interest is applicable on fixed deposits with a tenure of one year or more.

Senior citizen rate not applicable in NRE deposits: Unlike regular FDs, NRE deposits opened and maintained by people above 60 years of age do not offer a higher rate.

In case of premature withdrawal of the entire deposit amount before the minimum tenure (1 year for NRE FDs), no interest will be paid.

In case of premature withdrawal after one year, interest will be paid for the period the deposit remained with the bank at the rate applicable at the time of booking for the actual tenure of the Term Deposit and not at the contracted rate. The applicable premature withdrawal penalty will also be deducted.

Any excess interest paid at the contracted rate (as part of monthly or quarterly payouts) will be recovered from the principal amount in case of premature withdrawal.

Interest on NRI Fixed Deposits is calculated based on the deposit amount, tenure, and applicable interest rate. Customers can choose payout options, including cumulative (paid at maturity), quarterly or monthly interest. Monthly payouts are typically offered at a slightly discounted rate.

The interest amount is calculated following standard banking practices for FDs.

Note: Interest rates vary depending on the tenure that may range from 1-10 years. The rates mentioned above apply to fixed deposits below ₹3 crore. Also, what is most appealing is that NRIs can earn tax-free income from these NRE deposits in India.