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.
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.
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 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.
Recommended Read :
- What is Fixed Deposit?
- Why Banks Take Fixed Deposit?
- Fixed Deposit Vs Mutual Fund
- Fixed Deposit Vs Recurring Deposit
- Bonds Vs Fixed Deposits
- Fixed Deposit Vs Non-Convertible Debenture
- Best Alternatives to Fixed Deposits
- How to Compare and Select Fixed Deposit Plan?
- Who is a NRI?
- Who is Not An NRI?
- Banking Facilities for An NRI
- Who is a Person of Indian Origin PIO?
- Home Loan for NRI
- What is An NRE Account?
- What is NRO Account?
- What is FCNR Account?
- Who is a OCI Overseas Citizen of India?
- Overseas Corporate Body – OCB Investment