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How to open fixed deposits for NRI? Opening FD for NRI

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FD for NRI

Everyone has heard of the concept of brain drain, intellectual minds of India working on foreign lands. But, according to us, this concept is much about wealth drain. Indian overseas residents, who work in foreign country, like to send the earnings to their mother land, for their family. If you are such a proud native of this nation, a fixed deposit account is the best way to do so. An NRI FD provides an investor with multiple benefits.

FD for NRI

NRI fixed deposit is for the Indian investors living outside India. An NRI FD is a very beneficial option for any NRI investor who wants to save money in India. Before making your mind about opening a FD in India, just consider the following points.

  • Interest rates for NRI deposits are high as RBI wants to increase the inflow of foreign currency into India.
  • A NRI fixed deposit pays interest which is not tax deductible.
  • Current exchange rates for INR are higher. So an investor can get more INR in exchange of foreign currency.
  • NRI FD allows premature withdrawal on advance notice after deduction of a very small penalty.
  • Banks can provide loans, secured on the FD.

Before opening any FD, an NRI should be aware about the type of deposits he/ she can invest in.

NRE Accounts

These accounts can be maintained by an NRI in the form of current, savings or fixed deposits. The account can be in Indian rupees. These accounts have many tax advantages like interest payment on FD under an NRE account are tax free. The account must be maintained for a minimum term of one year.

NRO Accounts

An NRO (Non Resident- Ordinary) is very similar to NRE account with a difference that NRO accounts can be used to deposit money earned in India while an NRE strictly allows to deposit the money which is not earned India. It can be maintained in Indian rupee and can be in the form of savings, current or fixed deposit.

FCNR Accounts

FCNR stands for foreign currency non- resident accounts. These accounts can only be maintained in foreign currency by an NRI. These accounts are sensitive to the foreign exchange rates.

Choosing the right account type is very important but it is important to know some very important points about an NRI FD.

  • Minimum duration of NRE FD is 1 year.
  • Although NRE is tax free in India but global income might be taxable in your residing country.
  • NRI deposit accounts do not provide cheque books or ATM cards.
  • Account will be eligible for interest payments if the account is maintained for a minimum term of 12 months.
  • NRI FD can be issued for joint holders.

NRO funds can’t be used for NRE or FCNR deposits.

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Shubham Mishra is an Actuarial Analyst at Mercer Consulting Services India Ltd. Being an actuarial science graduate, he has a very deep knowledge about each and every aspect of insurance market. He has published a few research papers on insurance topics in the magazines of reputed insurance institutions.

10 COMMENTS

  1. The growing influx of Indians in foreign countries makes it very beneficial for the home country financial institutions to open up markets and facilities for NRIs. Globalization has made it essential for home countries to account for in flowing foreign currencies and giving best returns to their customers. This also ensures good health of the financial institutes dealing with foreign currencies.

  2. To open an FD, NRI need to present copies/scan copies of required document that can be passport, valid work permit/employment visa, valid student visa, PIO card or past Indian passport of self/parent/grandparent, and address proof. They can open the account by remitting money from overseas through normal banking channels or by transferring funds from an existing NRE/FCNR account held with the same bank or any other bank. The account can be in Indian currency or foreign currency. The minimum duration for NRI FD is one year.

  3. This is a win win option for any non residential indian. The best part about it is that the currency exchange rates will only just increase the value of money and you will have more savings when you exchange a DOLLAR for RUPEES. With the globalisation and digital media, opening the fixed deposit is at your fingertip. One really doenst need to be physically present to get this done and can do it all online. Perfect Saving Option!!

  4. Owing to the growing number of Indians settling outside the country, this is really a great initiative by the Indian government. The NRI FD is an amazing scheme for the NRIs who want save their hard earned money in their motherland. The article is a great informative piece giving vital information about the protocols of these schemes. A high interest rate is another perk of these schemes.

  5. It is a good gesture on the part of NRI to give some special facilities to NRI FD. It is a great way to attract foreign money to our country. This article is a good eye opener as in the factors which an NRI must keep in mind before opening a FD in India.

  6. A thoughtful initiative for our people working in foreign lands. A good gesture over the issue of brain as well as wealth drain. A true native and patriotic kind of feeling blowed me through this. Various schemes have been describes in the article regarding opening a FD for NRI. Quiet a problem solving effort .

  7. Opening up an FD for an NRI is no more an issue as this article extensively talks about the matter in a lucid manner. It talks about the various accounts which can be opened for the NRI’s in India. The article gave me a lot of information about the requirements for opening various accounts as NRI in India. It is a helpful article.

  8. NRI FD is a lucrative initiative by the Goverment to bring some foreign currency to Indian shores. The many advantages like high interest and exchange rate, exemtion of tax, premature withdrawal are some of the ways . The article explains some types of NRI a/c with my preference being the NRE account. This is because the interest payment is tax free and the tenure is for a year.

  9. This is a very interesting article , something that is of special interest to me as I have relatives who stay abroad and are NrI’s . Fixed deposits made by NRi’s attract higher interest rates and that by itself is a good reason to open an account. Besides , the country stands to gain as there will be an influx of wealth. The exchange rates are also in their favour.

  10. An interesting way of thinking that may bring back some money from a working force that has been lost due to better possibilities abroad. It´s sad that someone´s native country overlooks the potential in people. India is not the only country with this problem. However, the brain fleeing is even worse. Anyhow, great article, explaining matters that might interest somebody who isn´t from India.

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