In the last couple of months, there has been a significant rise in the fixed deposit interest rates. Fixed deposits may continue seeing a hike in interest rates owing to the repo rate hikes. Many banks have already increased their rates, while others are likely to follow suit sooner or later.
The rise in FD rates will help residents in India and those living outside the country. NRO FDs have gained attention owing to changes in interest rates. Many NRIs who want to park their money in Fixed Deposits (FDs) can put their money in an NRO account and earn higher returns. The NRO account can be opened by an Overseas Citizen of India (OCI), a Person of Indian Origin (PIO) and Non-Resident Indians (NRIs).
The account can also be jointly held with an Indian resident relative per the RBI guidelines. All your earnings in the form of Indian currency, such as salary, rent, interest, property transactions etc., can be saved in the NRO account. So, if you need money in Indian currency, then the NRO account can be highly beneficial.
For NRIs who wish to open an FD must have it in an NRO account as per the FEMA rules. Ignoring the conversation can invite a penalty.
Key features of NRO Fixed Deposit
An NRO account is helpful in saving money you regularly receive through your sources within India. The interest you earn is higher but taxable as per the Income Tax Act, 1961.
The interest you earn can be transferred from this account to a foreign account as per the rules. You can also open a joint account with your Indian relatives who live in India and are also Indian citizens.
The money saved in the NRO account is maintained in Indian currency; therefore, you cannot convert it into foreign currency. The interest earned may vary from bank to bank.
You can earn the higher interest and avail tax benefits if you open a five-year FD. Benefits are given as per the section 80 of the Income Tax Act with certain conditions.
Your NRO deposits can be auto renewed once you opt for this option. This can help you continue earning interest on your current deposit.
The table below illustrates the deposit rates. Senior citizens can earn additional interest as per the bank’s rules. You can choose based on your requirements and financial goals.
INTEREST ON NRO DEPOSITS (Best Offered Rate for tenor <=5 Years)
Data as on respective banks’ website on 22 Nov 2022.
Highest Interest rate offered on NRO deposits of up to Rs 2 crore for tenor up to 5 years for all listed (BSE) public & private banks, and foreign Banks considered for data compilation. Highest rate offered for up to 5-year (7 days to 5 years) period is considered in the table. Banks whose websites don’s mention the data are not considered. **Value calculated on the basis of quarterly compounding of interest for tenor of 5 years *Minimum deposit may vary depending on type of account and bank’s T&C.
Compiled by BankBazaar.com