NRE FDs: Fixed deposit schemes offer up to 8% returns: What overseas Indians should know before investing

With global interest rates remaining elevated and the Indian rupee continuing to attract overseas investors, Non-Resident Indians (NRIs) are increasingly exploring fixed deposits (FDs) as a low-risk avenue to park their savings. Indian banks currently offer NRE fixed deposit rates ranging from around 6% to nearly 8% per annum, depending on the bank and tenure, making them an attractive option for NRIs seeking stable returns.

NRE, or Non-Resident External, deposits are specially designed for Indians living abroad. These deposits allow NRIs to maintain their foreign earnings in rupee-denominated accounts while enjoying several tax and repatriation benefits.

NRE Fixed Deposits

One of the biggest attractions of NRE fixed deposits is their tax efficiency. Interest earned on NRE deposits is fully exempt from tax in India, and banks do not deduct Tax Deducted at Source (TDS) on these deposits.

Additionally, both the principal and interest amounts are fully repatriable, allowing NRIs to transfer funds abroad without restrictions.

Unlike regular fixed deposits, however, NRE deposits do not offer higher interest rates to senior citizens. Even depositors above the age of 60 receive the same rates as other NRI investors.

Interest Rates

Among major banks, some of the highest NRE FD rates are currently being offered by private lenders.

DCB Bank offers rates of up to 8.05%, while IndusInd Bank offers up to 7.99% on select tenures. Federal Bank, Karnataka Bank, Kotak Mahindra Bank and Saraswat Co-operative Bank also offer rates ranging between 7% and 7.5% across various maturities.

Among public sector lenders, Canara Bank offers up to 7.40%, while Punjab & Sind Bank, Union Bank of India, Bank of Baroda, State Bank of India and Punjab National Bank offer rates largely in the 6.5%-7.3% range.

Financial experts advise NRIs to compare rates across tenures rather than focusing solely on one-year deposits, as many banks offer their highest rates in the two- to five-year maturity bucket.

Premature withdrawal rules

NRE fixed deposits come with specific withdrawal conditions.

If an NRE FD is closed before completing one year, no interest is paid. If the deposit is withdrawn after one year but before maturity, the investor receives interest applicable to the actual period the deposit remained with the bank rather than the contracted rate.

Banks may also impose premature withdrawal penalties, and any excess interest already paid through monthly or quarterly payout options may be recovered from the principal amount.

Interest Payout Options

NRI depositors can choose between cumulative and non-cumulative payout options. Under cumulative deposits, interest is paid at maturity along with the principal. Under non-cumulative options, interest can be credited monthly, quarterly, half-yearly or annually.

Monthly payout options are generally offered at slightly lower effective rates than cumulative deposits.

What should NRIs consider?

While NRE fixed deposits offer attractive returns, tax-free income and full repatriability, investors should also consider factors such as currency fluctuations, liquidity needs, tenure selection and premature withdrawal conditions.

For NRIs looking for predictable returns and a relatively low-risk investment avenue in India, NRE fixed deposits continue to remain one of the most popular savings and wealth-preservation tools in 2026.