Non-Resident Indians (NRIs) are individuals of Indian origin who live abroad but maintain strong ties with their home country. One of the most sought-after investment avenues for these NRIs in India is fixed deposits (FDs).
There are many non-banking financial companies in India that offer the best FD rates to these individuals who desire where they took birth. Moreover, being a risk-free option due to the fixed returns, NRIs prefer to invest in them the most as they are relatively safe and provide assured returns.
What is a fixed deposit?
Also known as a term deposit, it is a financial instrument offered by banks as well as non-banking financial companies (NBFCs) in our country that allows potential investors to deposit their savings for a predetermined tenure. In this scheme, the individual earns a fixed interest rate.
The deposit amount is locked in for a specific period of time, and the rate of interest offered depends on the tenure. The longer the tenure, the higher the interest rate offered. Therefore, the interest rate on an FD is usually higher than that offered on a savings or current account.
Furthermore, there are specific tools available such as an FD calculator, that help you with your overall investment plan.
What is an NRI fixed deposit?
It refers to the type of FD account that is mainly designed for Indians who reside outside the country. This investment instrument offers a secure investment option with predetermined interest rates and a fixed tenure.
This is typically offered by Indian banks to attract investments from NRIs, and the deposits by these individuals can be made in major foreign currencies like USD, Pounds or euros.
Also, if you want to know that “What is fixed deposit interest rate?”, then simply it is the interest rate offered by banks or financial institutions on fixed deposit accounts.
What are the things to keep in mind before opening NRI Fixed Deposit?
- Eligibility and Documentation
Ensure that, firstly, if you are an NRI, you meet the eligibility criteria set by the bank for opening an NRI fixed deposit. Moreover, keep all the documents such as NRI status, passport, visa, and overseas address proof handy.
- Currency and Tenure
Decide whether you want to open an NRI fixed deposit in INR or foreign currency. Moreover, also consider the tenure options available and then choose the one that suits your goals. Longer tenures may offer a higher rate of interest but will also lock your funds for a more extended period.
- Tax Implications
It is very, very important first to understand the tax implications both in India as well as your country of residence. The interest amount earned on these FDs is taxable in India. Lastly, check if there are any Double Taxation Avoidance Agreements (DTAA) between India and your country to avoid being taxed twice.
- Fixed deposit interest rate
Compare this before putting your hard-earned money. Check interest rates offered by different banks and look for competitive rates that can help you maximize your returns. In my personal opinion, Bajaj Finserv is the best platform for this facility.