NRE or Non-Resident External deposit accounts is a facility for NRIs wherein NRIs can invest their foreign earnings in India to realize high returns as rupee deposits. Few of the key features that make it a lucrative option for NRIs are highlighted below:
1. Attractive Tax-free interest rate
2. Complete and free repatrability, i.e the foreign exchange maintained as Rupee deposit can be again converted into foreign currency without any restriction that includes the investment amount plus interest that is accumulated.
3. Availability of loan or overdraft facility against NRE deposits.
4. Flexibility in terms of any allowable convertible currency.
5. Tenure for the NRE deposit could be as low as 1 year.
Here are few of the best NRE Bank deposits for NRIs:
For a tenure of 1 year to less than or equal to 10 years and a deposit amount of less than 1 crore, Yes Bank offers the highest interest rate of 7.1% per annum. Special rates of 7.15% and 7.20% are offered for two tenures of 18 months 8 days to 18 months- 18 days and 36 months 10 days to 36 months 20 days respectively. It can be noted that the NRIs can open the NRE deposit with the YES Bank with as less as Rs 10,000. This is probably one of the best NRE FDs, which NRIs should consider as interest rates are higher.
For an amount less than 1 crore, the public sector lender is offering an interest rate of 7% for a tenure of 1 year to 2 years. For a tenure of 2 years and less than 3 years, the bank offers a rate of return of 6.75% and for over 3 years up to 10 years the return is 6.5%. Again, it is one of the best NRE Fixed Deposits, because of the higher interest rate when compared to peers.
For a sum of less than 1 crore an attractive interest rate of 6.9% is offered for a tenure of 1 year up to 455 days. Interestingly, this higher than the interest rate being offered by SBI on domestic deposits. The tenure of 455 days to less than 2 years fetches a return of 6.75%. For over a sum of Rs 1 crore, the bank offers a uniform interest rate of 4.25%. This is a very low interest rate.
India's private sector lender ICICI bank offers NRE deposits with a monthly as well as quarterly pay out. For deposit amount less than 10 million the bank provides return as follows: a one year to 389 days deposit fetches an interest rate of 6.9 per cent for deposits less than 10 million. On the other hand a 390 days to two years, fetches an interest rate of 7%. A 2 years 1 day to 5 yrs, gives you an interest rate of 6.75% and 5 years1 day to 10 years, gives an interest rate of 6.75%.
Premature withdrawal also attracts a penal rate that depends on the deposit amount as well as the tenure of the deposit. Deposits with monthly pay-out offer an interest rate at a discounted rate.
For a deposit amount Rs 1 crore to Rs 500 crore and above the bank offers an interest rate of 6.5%.
For a deposit amount of less than Rs 1 crore for a tenure maintained in Indian Rupess, an NRI shall earn a return of 6.9 per cent on NRE Deposits. Tenure of over 1 year and upto 2 year shall fetch a return of 6.25%. The NRE deposits parked for a tenure of over 2 years and above shall provide 6% interest rates. The amount in the NRE deposit account can be either directly remitted to the bank, provided as travellers cheque or presented as foreign currency. Funds can also be transferred in any freely convertible foreign currency. The interest rates are competitive though not the best NRE Deposit interest rates.
For deposits of less than Rs 100 lakh invested in NRE deposits with the Federal Bank, an NRI shall fetch 6.7% interest rate for a 1 year deposit, 6.8% return for a tenure above 1 year to 2 years and 6.5% for tenure over 2 years. Again, pretty competitive, but, not the best.