All About NRE Fixed Deposit

NRE Fixed deposits provide NRIs the opportunity to earn higher returns on their overseas earnings parked in India. While tenure and other features are important, the interest rate is one major factor influencing investment decisions. The rate of interest varies based on the deposit amount and tenure. The rates are also subject to change at the bank’s discretion, depending on various market conditions.

Here’s what we will cover in this article:

Understanding NRE Fixed Deposits
Benefits of NRE Fixed Deposits in India
The factors impacting the interest rates
The method of opening an NRE fixed deposit

Understanding NRE Fixed Deposits

NRE fixed deposits are popular investment products where NRIs can deposit their foreign currency earnings in Indian Rupees. The tenure varies between 1 and 10 years. Both the principal amount and the accumulated interest on NRE deposits are free from any withholding tax deducted at source, as per current Income Tax guidelines.

Benefits of NRE Fixed Deposits in India

An NRE (Non-Resident External) Fixed Deposit account in India has several benefits. Here are the key benefits:

1. Tax-Free Interest Income
The best part about NRE fixed deposits is that the interest earned is exempt from income tax in India.

2. Repatriable Funds
The principal and interest earned on NRE FDs are fully repatriable. It means NRIs can freely transfer the funds back to their country of residence without any restrictions. It becomes the ideal choice for long-term savings and future overseas needs.

3. Attractive Interest Rates
NRE fixed deposits often offer competitive interest rates compared to other deposits in many countries. These rates are fixed at the time of deposit and gives stable returns over time.

4. Multiple Pay-out Options
You can choose to be paid interest on your deposit at the time of maturity, quarterly or even monthly.

5. Flexible Tenure Options
The deposit terms come with flexible tenure options. It gives investors the choice to align deposits with their financial goals.

6. Joint Holding Facility
NRE FDs can be jointly held with another NRI. They can share control as families or spouses living abroad can access it. An NRE FD can also be jointly held with a resident Indian. However, the resident Indian will only have control over the NRE FD in the event of the NRIs demise.

Factors Influencing returns from NRE Fixed Deposits

The returns from NRE fixed deposits are influenced by a number of factors, such as:

RBI Policies

RBI’s monetary policies determine the NRE fixed deposit rates. One such policy is about the repo rate. If the repo rate goes up, banks can offer more lucrative rates to attract more deposits. Similarly in a reducing interest rate scenario, Banks may reduce their deposit rates.

Currency Fluctuations

The movement in the exchange rates of the Indian rupee from foreign currencies impacts returns from NRE fixed deposits, especially if the funds are intended to be repatriated.

How to Open an NRE Fixed Deposit with Kotak

You can book an NRE fixed deposit with Kotak through the following ways:

Digital Channel:

1. Through your mobile banking/net banking application
2. By sending an email through your registered email ID to [email protected]
3. By raising a request through Secure Mail on your Net banking application

Physical Channel:

1. By visiting the branch
2. By contacting your RM

An NRI can appoint a resident of India as a Power of Attorney to manage their FD account on their behalf. It includes opening or renewing NRE fixed deposits, making premature withdrawals (if allowed), and handling related paperwork.

Please note: Deposits above Rs. 5 Cr are accepted as per the bank’s discretion.

Conclusion

Enjoy competitive rates on Kotak Fixed Deposits for NRIs. Check out the rates for different deposit amounts and tenures to determine the rates applicable to you. You can also decide on the deposit amount and term based on the rates to maximise the returns.

FAQs

1. How do you know which rates are applicable to you?

You can see your applicable rates based on the tenure you want to pick and the type of deposit you want to book

2. Are there any premature withdrawal charges?

The premature withdrawal charge for NRE Fixed Deposits vary based on when the deposit was booked, and how prematurely the NRE Fixed deposit is being withdrawn. The minimum tenor for a NRE deposit is 1 year, below which no interest is paid. Visit our website to check the penalty for premature withdrawal.