Business & FinanceIs NRE Fixed Deposit Account a Good Investment Option?

Is NRE Fixed Deposit Account a Good Investment Option?

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An NRE fixed deposit account is a great investment instrument for non-resident Indians as it allows you to earn substantial returns and transfer them hassle-free into any account, which includes your international account. Additionally, banks store the money you transfer into this account in Indian rupees, and offer significant returns along with the partial withdrawal facility.

 

If you’re considering opening one, here is why you shouldn’t wait any longer.

 

Guaranteed high returns

The Central Bank or the Reserve Bank of India does not regulate the interest rates banks set on NRI FDs. The upside to this is that banks can offer as high a rate on this instrument as they want. By opening an NRE FD, NRIs can earn competitive returns. It’s hard to find a zero-risk investment option that extends such high guaranteed ROIs in, say, the U.K. or the U.S.A., where the majority of NRIs live.

 

Free from taxation

The income earned from an NRE fixed deposit account is tax-free under Section 10(4) of the Income Tax Act. This exemption does not just cover the principal or the interest component of the FD but the total amount. With this benefit in the kitty, NRIs don’t have to think twice about taxation compliance when transferring funds from an NRE account back home. 

 

Tenure flexibility

If you’re an NRI looking for a short-term or long-term zero-risk investment, open an NRE FD account. You can start one for as little as 1 year and can go up to 10 years. During this time, your interest will be compounded and paid into your account quarterly. Some banks also extend you the facility for automatic renewal of your NRE FD.

 

Partial withdrawals allowed

Depending on the terms of your bank, you can partially withdraw funds up to a stipulated amount before maturity. Doing this does not hamper your ROI, and you don’t end up surrendering your FD. Therefore, investing in this instrument not only provides substantial returns but also keeps your liquidity intact.

 

Online application available 

You can open an NRE fixed deposit account online in a few easy steps. All you have to do is visit a bank’s website, fill up the NRE FD form, upload relevant documents, provide account details, and you’re done. Your account information is needed to electronically transfer funds into the NRE FD account. With the benefit of online application, rid yourself of the trouble of finding an Indian bank branch at your current place of residence.

 

Funds can be deposited in any currency

Although you can deposit them in any currency, the funds are converted to INR. Due to this, the funds remain free from currency fluctuations. What’s more, since partial withdrawals and loans against NRE FDs are allowed, you can use these funds within India more easily. Even on maturity, you can transfer NRE FD funds into an NRO or NRE savings account and reinvest them in other instruments.  

 

Final thoughts

All set to open your NRE FD? Well, then begin your journey by researching the right bank. Make sure you choose the one that confers a high-interest rate along with a user-friendly online portal and exceptional customer service.

 

Remember, your NRE FD is a safe and secure way to begin your financial planning in India. So, make the most of it by customizing your tenure correctly.

 

Don’t wait any longer! Plan and start your NRE FD right away.

Trisha Oberoi
Trisha Oberoi
I turned my can'ts into can's and dream into plans and things begin to change. Trisha, an accomplished writer who brings a unique blend of creativity and expertise to the world of entertainment, fashion, and lifestyle. With a deep passion for these subjects, Trisha has established themselves as a prominent voice in the industry. She allure readers with their insightful perspectives and engaging storytelling.

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