#nre fd

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NRE Fixed Deposit - Explore ICICI Bank's Non-Resident External Fixed Deposit Account for NRI Services

NRE Recurring Deposit Account - The NRE RD account stands out as an excellent option for NRIs seeking substantial savings through modest monthly investments. Easily transfer funds from your NRE Savings Account to capitalize on this opportunity.

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What happens to the NRE FD Account after returning to India?

You dream of travelling abroad in search of growth and better opportunities. It is better to remain prepared for many things, including collecting funds, searching for a job, savings, remitting money, etc. Sometimes, you may also need to fund your family during an emergency. Hence fund liquidity is one of the factors to consider while applying for Bank and Deposit Accounts.

As a Non-Resident Indian, you can invest your money in a Non-Resident Ordinary, Foreign Currency Account, and Non-Resident External or NRE FD. The interest rate on these accounts may differ from the interest rate on resident FDs.

Advantages

It is good to park your funds in NRE Fixed Deposits because the interest earned is tax-free in India, the movement of funds is easy, and there is a repatriation option on the investment. You can open them if you want to park funds from foreign countries, require full repatriation, and save your funds from currency fluctuations.

Return to India

As an NRI, use NRO FD to invest money earned in India and open a joint account with an Indian citizen. You need to convert it into resident accounts upon returning to India. The interest is payable at the original rate if the deposit is for the entire term, even after transforming into a resident foreign currency account. But under NRE FD Account, the deposits remain constant until maturity till you return to India and become a resident.

You need not convert them into resident accounts. Prematurely breaking the FD attracts penalties varying between banks. Your foreign income does not attract taxes. After returning, you become a resident Indian, and your global income becomes taxable. The Double Taxation Avoidance Agreement is available if the overseas income is also taxed locally.

Duties

Immediately on their return to India, NRIs should inform their bank to designate their NRI FD Accounts as Domestic Resident FD Accounts or transfer the balance in their NRE or FCNR Accounts to Resident Foreign Currency (RFC) Accounts. FCNR Accounts are valid until maturity and, upon maturity, can be converted to RFC accounts.

How to open it?

Many banks are offering an NRE Fixed Deposit Account to help you store your funds in foreign currency. You need to fill out the online form on the banking app, attach the supporting documents, and wait for the bank’s approval. Your FEMA declaration, the current work contract, a copy of CDC, and the last page that features your disembarkation stamps are necessary if you are a seafarer.

Which one is ideal?

You can open either an NRE or NRO Fixed Deposit with the bank, depending on your income source. Other investment options include NRI Savings Accounts, that offer a secure place to store your hard-earned money.

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Learn about non resident external fixed deposit and its interest rate.

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5 Reasons That Make NRE Fixed Deposit an Excellent Investment Option for NRIs

If you have a stable career in a foreign land and some decent savings, you might be looking for investment options to grow your capital. Typically, NRIs are not comfortable with the high-risk investment options like an equity investment. They prefer investing in instruments that will keep their capital secure while also offering decent returns on the same.

NRE FD accounts perfectly match this requirement. As per the Foreign Exchange Management Act (FEMA), NRIs are not allowed to open basic FD accounts in India. Thus, to make sure that even NRIs can advantage of this safe and flexible investment option, an increasing number of banks now offer NRE FD accounts.

Let us have a look at five reasons that make NRE FD an excellent investment option for NRIs-

1. Higher Interest Rate

As compared to bank accounts like NRE savings account, which are preferred by NRIs for parking their foreign earnings, NRE FD offers a higher rate of interest. The interest rate can be as high as what resident Indians earn on FD accounts.

Moreover, as FD returns are in no way linked to the market conditions, you are sure to receive the interest promised by the bank at the end of your FD tenure.

2. Flexible Investment Tenure and FD Amount

Irrespective of whether you have a short-term or a long-term goal, you can invest in an NRE FD account as they have flexible tenures. Most banks allow you to invest in NRE FD account for tenures ranging from 1 year to 10 years.

Moreover, you do not need a huge sum to start investing. There are now banks that allow you to open an NRE FD account with as little as Rs. 25,000. Also, you can fund the account with most of the popular currencies and get competitive exchange rates.

3. Tax-Free Returns

The interest that you earn from an NRE FD account is tax-exempt in India. This is a significant benefit over options like NRO savings account and NRO FD account.

4. Capital and Interest Fully Repatriable

In case if you want to transfer the FD investment to the country of your current residence, you can do so as NRE FD accounts are fully repatriable. Not only the principal invested but also the interest earned on the same can be transferred to a foreign country without paying any additional charges.

Some of the banks also offer partial withdrawal facility along with the repatriation benefit to help you manage your financial emergencies even in a foreign country.

5. Loan Against FD 

One of the significant benefits of an NRE Fixed Deposit account is the loan facility. You can get a loan of up to 90% of the FD deposit account at attractive interest rates. You are free to use the loan amount as you like.

As compared to other types of unsecured loan options like personal loans, loan against FD proves to be a cheaper option. Even the documentation requirements are minimal, and approval is generally quick and hassle-free.

Selecting a Bank for NRE FD

It is not difficult to understand why NRE FDs are an excellent investment option for NRIs. If you are convinced and want to open an account, look for a reputed bank that offers a high-interest rate and has an excellent reputation.

Check the terms and conditions of the bank before opening the account to avoid any discrepancies in the future.

“The contents of this article is meant merely for informational purpose. Any reliance placed on such information is therefore strictly at one’s own risk.”

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Fixed Deposit is a popular investment option now available for NRIs along with a host of additional benefits to help them earn attractive returns in a safe and hassle-free manner. To know more, visit https://www.icicibank.com/nri-banking/bankAccounts/nre-fixed-deposit-accounts.page

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All You Need to Know About NRI Fixed Deposits

When you’ve saved up enough money in your savings account, you can use the opportunity to earn higher interest rates on it, as opposed to the basic 3% or 4% interest you earn on your savings – you can open a fixed deposit. The term ‘fixed’ implies that your deposit can be maintained for a specific period or term, which is why FDs are also known as term deposits. These deposits can be opened by both, Resident Indians and well as Non Resident Indians. If you are an NRI looking to open an NRI fixed deposit, this article is for you.

·         Types of FDs

You can create three types of fixed deposits as an NRI – Non-Resident External Rupee or NRE FD, Non-Resident Ordinary Rupee or NRO FD and Foreign Currency Non- Repatriable or FCNR FD. While the first two FDs are created in INR, the third type of FD may be created in foreign currencies (as is apparent from the term). Creating the foreign currency deposit is just as safe as creating NRE or NRO deposit, since you don’t have to worry about currency fluctuation on maturity.

·         Currencies of Deposits

While the NRO fixed deposit is a Rupee deposit, NRIs can create FDs in several major international currencies. These include the US Dollar, Great Britain Pound Sterling, European Euro, Japanese Yen, Australian Dollar, New Zealand Dollar, Singapore Dollar and Hong Kong Dollar. Other accepted currencies for NRI deposits include the Swedish Krona, Danish Krone and Swiss Francs.

·         Investment term

Typically, FDs for NRIs can be created for a period of 7 days at minimum, whereas the maximum deposit term is 10 years. Note that the 7 days to 10 years term is applicable only on NRO and NRE Fixed deposits. In case of foreign currency deposits, the minimum and maximum investment term is 12 months and 5 years respectively.

·         Interest rates

The interest you can earn on your NRI deposit depends upon the type of deposit you own. Since you would be depositing foreign currencies in your FCNR and NRE account FD, the interest rates are different as they are set on the basis of LIBOR/SWAP rates. In case of NRO deposits, most banks offer the same interest rates as those offered to resident Indian FD holders, since the NRO account is essentially a rupee account.

·         Joint holding

All NRI deposits can be held jointly with another individual. However, the individual you assign as a joint holder can differ based on the type of FD you’ve opened. For instance, in case of NRE or foreign currency FD, the joint holder should be another NRI. On the other hand, in case of NRO fixed deposits, the joint holder should be a resident Indian.

·         Premature withdrawal

Although FDs are meant to last through the deposit term; many banks also allow you to withdraw your NRI deposits, before the term ends. You can withdraw your deposit in a financial emergency. However, you have to pay a small penalty for premature withdrawals – typically 1% of the interest earned on the FD. Also, the premature withdrawal penalty is waived off, after a specific period of holding the FD.

Final word:

NRI FDs are a great way to park away your savings, if you prefer conservative and safe means of investments. Creating FDs, especially FCNR FDs can help you benefit from currency rate fluctuations, when the FD matures. Once the FD has matured, the new exchange rate would be applicable, and if it is higher than when you invested, you can turn a huge profit by reinvesting.