Best Fixed Deposit Schemes
for NRIs in India
NRE, NRO, and FCNR deposits explained — interest rates, tax treatment, repatriation rules, and the right FD type for every NRI’s situation.
Why NRI Fixed Deposits Are a Popular Investment Choice
Fixed deposits remain one of the most popular investment vehicles for Non-Resident Indians (NRIs) parking money in India. They offer guaranteed returns, government-backed bank safety, and — in the case of NRE FDs — complete tax exemption on interest income in India. With Indian FD rates significantly higher than savings rates in most countries where NRIs reside, the return differential is attractive even after accounting for currency risk.
India offers three types of NRI fixed deposits: NRE (Non-Resident External), NRO (Non-Resident Ordinary), and FCNR (Foreign Currency Non-Repatriable). Each serves a different purpose and has distinct tax and repatriation rules.
The Three NRI FD Types — Side-by-Side Comparison
| Feature | NRE FD | NRO FD | FCNR FD |
|---|---|---|---|
| Currency | Indian Rupees | Indian Rupees | Foreign Currency (USD, GBP, EUR etc.) |
| Source of Funds | Foreign earnings remitted to India | Income earned in India | Foreign earnings remitted to India |
| Interest Taxability (India) | Tax-free | Taxable at 30% TDS | Tax-free |
| Principal Repatriation | Freely repatriable | Capped at USD 1M/year | Freely repatriable |
| Interest Repatriation | Freely repatriable | After paying taxes | Freely repatriable |
| Exchange Rate Risk | Yes (on principal) | Yes (on principal) | No (held in foreign currency) |
| Tenure | 1-10 years | 7 days to 10 years | 1-5 years |
| Joint Account | Only with another NRI | With NRI or resident Indian | Only with another NRI |
NRE Fixed Deposits — The Tax-Free Rupee FD
NRE FDs are the most popular NRI fixed deposit product. Funded with foreign earnings converted to rupees, NRE FDs offer:
- Interest fully exempt from Indian income tax (no TDS deducted)
- Principal and interest freely repatriable without RBI approval
- Attractive rupee-denominated returns (currently 6.5-8.25% depending on bank and tenure)
- Same rates as resident FDs in most banks
Key risk: Rupee depreciation can erode your returns when measured in your home currency. If INR depreciates 3-4% against USD annually, a 7% NRE FD effectively yields 3-4% in dollar terms. For long-term NRIs who plan to retire in India, this is not a concern. For those planning to repatriate funds, consider the currency dimension carefully.
NRE FD Rates — Top Banks (2025-26)
| Bank | 1 Year | 2 Years | 3 Years | 5 Years |
|---|---|---|---|---|
| SBI | 6.80% | 7.00% | 6.75% | 6.50% |
| HDFC Bank | 6.60% | 7.00% | 7.00% | 7.00% |
| ICICI Bank | 6.70% | 7.00% | 7.00% | 7.00% |
| Axis Bank | 6.70% | 7.10% | 7.10% | 7.00% |
| Kotak Mahindra Bank | 7.10% | 7.10% | 7.10% | 6.20% |
| AU Small Finance Bank | 7.25% | 7.50% | 7.50% | 7.25% |
| IDFC First Bank | 7.25% | 7.25% | 7.00% | 7.00% |
Rates are indicative and subject to change. Always verify current rates on the bank’s official NRI banking page before investing.
NRO Fixed Deposits — For India-Sourced Income
NRO FDs hold income that originates in India — rental income from Indian property, dividends from Indian shares, pension from Indian employer, or royalties. Key points:
- Interest is taxable at 30% flat rate plus surcharge and cess (TDS is deducted at source by the bank)
- DTAA (Double Taxation Avoidance Agreement) between India and your country of residence may reduce TDS to 10-15% — submit Form 10F and tax residency certificate to the bank
- Repatriation of principal limited to USD 1 million per financial year after paying all dues
- NRO FD funds can be used for local Indian expenses without restriction
FCNR Deposits — Eliminate Exchange Rate Risk
FCNR deposits keep your money in a foreign currency (USD, GBP, EUR, JPY, CAD, AUD) within an Indian bank. The principal and interest are payable in the same currency, eliminating exchange rate risk on the principal. This makes FCNR deposits ideal for NRIs who:
- Want exposure to Indian bank rates without rupee depreciation risk on principal
- Plan to repatriate funds after the deposit matures
- Are uncertain about long-term India residence plans
FCNR rates are linked to international benchmarks (LIBOR/SOFR) plus a spread and are generally lower than NRE FD rates by 1-3%. However, the currency protection premium makes them worthwhile for large deposits over 3-5 year tenures.
DTAA Benefits — Reduce NRO FD Tax to 10-15%
India has Double Taxation Avoidance Agreements with over 90 countries. NRIs can claim DTAA benefits to reduce TDS on NRO FD interest from 30% to the treaty rate (typically 10-15%). To claim DTAA benefit:
- Obtain a Tax Residency Certificate from the tax authority of your country of residence
- Fill Form 10F (self-declaration) and submit to your Indian bank
- The bank will then deduct TDS at the reduced DTAA rate instead of 30%
- Submit these annually — banks typically require renewal every year
Common DTAA TDS rates: USA — 15%, UK — 15%, Canada — 25%, UAE — 0% (no income tax in UAE, so DTAA may not apply), Singapore — 15%, Australia — 15%. Consult a CA for the exact rate applicable to your specific situation.
Choosing the Right NRI FD — Decision Framework
| Your Situation | Recommended FD Type | Reason |
|---|---|---|
| Parking foreign salary in India, planning to bring back later | NRE FD | Tax-free, freely repatriable |
| Receiving Indian rental income or pension | NRO FD | Designed for India-sourced income |
| Worried about rupee depreciation, large corpus | FCNR FD | No exchange rate risk on principal |
| Planning to settle in India in 2-3 years | NRE FD (short tenure) | Convert to resident FD on return |
| NRI with spouse as resident Indian joint holder | NRO FD | NRE does not allow resident joint holder |
Safety of NRI FDs — DICGC Coverage
NRI FDs in Indian banks are covered by DICGC (Deposit Insurance and Credit Guarantee Corporation) insurance up to Rs 5 lakh per depositor per bank across all accounts. This applies to NRE and NRO deposits denominated in rupees. FCNR deposits may also be eligible — check with the specific bank. For deposits exceeding Rs 5 lakh, the safety net is the financial health of the individual bank. PSU banks carry implicit government backing; private banks and small finance banks carry higher (though still low) risk.
NRI FD Investment Checklist
- Confirm your NRI/NRE account status with your Indian bank before opening FD
- Compare rates across at least 3-4 banks — small finance banks often offer 0.5-1% more
- For NRO FDs, submit Form 10F and Tax Residency Certificate to avail DTAA benefit
- Consider FCNR if principal repatriation is planned and you are worried about rupee movement
- Use the FD Calculator to model maturity value before committing
- Declare NRE FD interest in your home country ITR if applicable
- Inform your Indian bank immediately when you return to India permanently
- Nominate a beneficiary for all your NRI FDs
🧮 Free Calculators — Use Them Now
No login required. Updated for FY 2025-26.
Frequently Asked Questions
NRE (Non-Resident External) FDs are funded with foreign earnings remitted to India. The principal and interest are freely repatriable and interest is tax-free in India. NRO (Non-Resident Ordinary) FDs hold income earned in India such as rent, dividends, or pension. NRO interest is taxable in India at 30% TDS (plus surcharge and cess). Repatriation of NRO funds is capped at USD 1 million per financial year after paying taxes. Choose NRE for foreign income you want to park in India tax-free; choose NRO for India-sourced income.
NRE FD interest rates vary by bank and tenure. Major banks currently offer: SBI NRE FD at 6.5-7.1% for 1-5 years, HDFC Bank at 6.6-7.25%, ICICI Bank at 6.7-7.2%, and small finance banks like AU Small Finance Bank at 7.5-8.25% for select tenures. These rates are broadly similar to resident FD rates. Shop across at least 3-4 banks before locking funds, as rate differences of 0.5-1% compound significantly over 3-5 year tenures.
Yes, interest earned on NRE FDs is fully exempt from income tax in India under Section 10(4) of the Income Tax Act, as long as you maintain valid NRI status. There is no TDS on NRE FD interest. However, this interest may be taxable in your country of residence depending on their tax laws and the DTAA between India and that country. For example, NRIs in the USA must declare NRE FD interest in their US tax return even though it is tax-free in India. Always consult a tax advisor in your country of residence.
FCNR (Foreign Currency Non-Repatriable) deposits let NRIs keep funds in a foreign currency like USD, GBP, EUR, or JPY in an Indian bank. Unlike NRE FDs (which convert to rupees), FCNR deposits eliminate exchange rate risk on the principal. They are ideal for NRIs who plan to repatriate funds in the future and want to avoid rupee depreciation risk on their principal. FCNR tenures range from 1-5 years. Interest and principal are fully repatriable. Interest is tax-free in India. Rates are generally lower than NRE FD rates as they are linked to international benchmarks.
NRE FD: Both principal and interest can be fully and freely repatriated abroad without any limit. NRO FD: Interest can be repatriated after deduction of applicable taxes. Principal repatriation is capped at USD 1 million per financial year (subject to CA certificate and Form 15CA/15CB). FCNR: Both principal and interest are freely repatriable as the deposit itself is held in foreign currency. Repatriation requires completing Form 15CA online and getting Form 15CB from a CA for amounts above the threshold.
When an NRI returns to India and becomes a resident, they must close or convert their NRE and NRO accounts within a reasonable period. NRE FDs can be converted to resident FDs or RFC (Resident Foreign Currency) accounts. The tax-free status of NRE FD interest ceases from the date the person becomes a resident. RFC accounts maintain the foreign currency advantage for returning NRIs and allow free repatriation. Inform your bank of change in residential status promptly to avoid regulatory issues.