The fact that banks and financial institutions offer fixed deposit (FD) benefits to their customers is known. All you must do is to open an account with the bank, choose from the FD options, decide the investment amount and tenure and apply for it accordingly. While the rules for citizens and residents are known, the rules differ for Non-Resident Indians (NRIs).
As opposed to the myth that NRIs have limited options to invest in fixed deposit in India, they are myriad types of FDs offered by banks for NRIs. These include:
NRE Fixed Deposits: This is the most common kind of investment that NRIs may make in their home country. As per rules, NRIs deposit their earnings in the bank and invest in bank FDs. In most cases, the ones with the highest FD interest rates attract investors. The deposits towards the FDs are accepted in Indian currency only. The period of investment and interest rate are different from those earned on domestic FDs. Besides, the NRIs gain from the tax-free nature of the interest earned.
NRO Fixed Deposits: The NRE Fixed Deposits will be invested in Indian currency just like their NRE counterparts. However, the interest earned on NRO FDs is the same as those on domestic deposits. Also, there are tax implications on the money deposited in an NRO FD account. NRIs with an income source in India can only opt for the NRO deposits.
FCNR Fixed Deposits: Having a Foreign Currency Non-Repatriable (FCNR) deposit is starkly different from most other FDs invested in by the NRIs. This is because investors can deposit their money in any currency other than the domestic currency.
RFC Deposits: NRIs planning to return to India can invest in this kind of fixed deposit (FD). There is the freedom to invest in any currency as most of the banks in India accept popular currencies like the US Dollar, Great Britain Pound and Europe. The interest earned on this FD is fully repatriable.
Investing in an NRI fixed deposit requisites investors to submit the following documents.
Passport: The investor must have a valid passport containing all details like the name of the NRI investor, address, date of birth, photograph and signature.
Visa / Work Permit: The bank will require the investor to submit Visa documents to check the work permit, permanent resident Visa, resident permit in addition to the employment Visa.
How Do NRIs Invest from FDs?
Like domestic depositors, NRI investors also benefit from putting their money in FDs. Some of them are:
- FDs are safe financial instruments that NRIs may invest in to earn decent returns.
- NRIs earning abroad find FDs investment an ideal option due to the fixed nature of its returns.
- Tax exemptions on certain kinds of FDs mean NRIs are relieved from the hassle of paying tax on earning from such FDs.
- The nomination option is similar to that in domestic FDs.