India continues to offer higher returns on many financial products compared to several nations across the world. Therefore, an increasing number of Non-Resident Indians (NRIs) prefer investing their surplus capital over here.
Fixed deposits (FDs) are one of the most popular investment avenues due to their assured returns and lower risks.Various financial institutionsoffer such deposits.
Types of NRI FDs
Deposits available for NRIs include four major options:
- Non-resident external (NRE) deposits
These are where the amount from the bank account is deposited in FDs. Here, only Indian currency deposits are allowed, and returns are tax-free and repatriable.
- Non-resident ordinary (NRO) deposits
Such deposits also accept investments in Indian Rupees (INR) and are offered to NRIs with an Indian source of income. The NRO fixed deposit interest rate is the same as those offered on domestic deposits, and you need to pay a tax on the returns.
- Foreign currency non-repatriable (FCNR) deposits
You can open an FCNR deposit using globally accepted foreign currencies.
- Resident foreign currency (RFC) deposits
These deposits are beneficial for NRIs who want to return to India and are accepted in USD, GBP, and Euro. The interest earned on these deposits is fully repatriable.
Here are a few things you will require while opening fixed deposits for NRIs:
- Passport with a valid visa
- International employment letter
- Tax residency Certificate from the Income Tax department in the country where you hold residential status
- Person of Indian origin (PIO) card if you have a foreign passport
- Passport copy at the start and end of the financial year
- Permanent Account Number (PAN) card copy
- If passport address differs from the local address, you can submit any one of these documents as address proof:
- Driving license
- Voter identity card
- Local property papers and registration deed
- Bank statement or passbook
- Electricity Board bill copy
Most financial institutions accept deposits only via cheque, National Electronic Fund Transfer (NEFT), or Real-Time Gross Settlement (RTGS). Another difference between domestic and NRI deposits is that the latter are not eligible for loans.
Before applying for NRI deposits, it is advisable to check your FD eligibility. You can make an online request to open an NRI deposit accountvia the financial institution’s website. NBFCs like Mahindra Finance offer attractive features for NRI deposits. For more details, you can visit the issuer’s website.