10 Benefits of NRE Bank Account and Fixed Deposits

If you are an NRI (Non-Resident Indian) then you have access to a unique bank account called NRE (Non-Resident External) account which allows you to keep your money in Indian rupees. This account then further allows you one of the best, fixed deposit investment options known as NRE fixed deposit, which currently provides fixed and interest rate e.g. 8.75% from Deutsche bank, resulting in a cumulative yield of 10.3% for a 5 years NRE fixed deposit. It's not just the Deutsche bank but other private and public sector banks like SBI, ICICI, HDFC, Kotak Mahindra, YES Bank they all provide very good returns on NRE fixed deposits.

Since many NRI are not aware of all the features, benefits, and advantages of NRE accounts, I am going to share them here for your quick reference. NRE account is a must for any NRI who wants to invest in India or wants to keep his money on Indian rupees, given the current USD to INR exchange rate which is around 66 INR for one USD, it's also a good time to open NRE fixed deposit.

Features, Benefits, and Advantages of NRE account

There are different types of NRE account like NRE saving and current account and NRE fixed deposit, all the features we are discussing here are applicable to both NRE saving account and NRE FDs.

1. Tax Benefits

This is the single most important reason and benefit of opening NRE accounts. Interest earned on NRE saving account as well on NRE fixed deposit is tax-free in India (see here). They are not counted even in your taxable income, in case you have some income in India. Due to this feature, NRE fixed deposits are one of the most secure and high yield investment options only available to NRIs.

2. Repatriation Benefits

Another key advantage of the NRE account is repatriation benefits. NRE saving account allows easy movement of funds because you can repatriate both interest and principle abroad. Funds in NRE accounts are fully and freely repatriable.

3. Low Balance required

Due to increased competition among public and private sector banks e.g. SBI, ICICI, HDFC, Axis Bank, and YESBANK, the minimum balance required has dropped significantly. Nowadays many banks including ICIC, HDFC, and Kotak require just Rs 10,000 as a minimum balance. Here is a nice comparison that will help you to choose the best bank to open an NRE account.

4. High-interest rate

Both NRE saving account and NRE fixed deposit offer high-interest-rate though this varies from bank to bank. Some banks like YESBANK offers around 6% interest rate for a certain amount in your saving account but most of the bank like ICICI and HDFC gives 4% per annum. 

The good part is that the interest rate is calculated on the daily closing balance and interest is paid half-yearly in June and December. This may vary depending upon the bank, so the best is to check with your bank in case of any doubt. You can use the tool mentioned in this article to compare the interest rates of different banks before opening an NRE fixed deposit.

5. Convenience benefits

One more advantage of NRE accounts is convenience. It's easy to open an NRE account. Most of the banks allow you to open an NRE account online. You just need to fill a form online, take a printout, attach the self-attested copy of the required documents and courier it to the bank in India. 

Some bank even provides free pick up of documents and some other has Free PO Box Service to send your documents depending upon which country you live in. 

Usually, Indian banks have better coverage for Singapore, Hong Kong, USA, UK, Canada, and UAE e.g. SBI has facilitation centers in Singapore to open NRE account right from Singapore, a great benefit for Singapore NRIs.

6. Joint holding

Another key benefit of an NRE account is that you can jointly open it with another NRI e.g. your wife or your children. I have already mentioned the benefit of joint accounts, e.g. it's one of the best ways to manage your funds as your partner can operate along with you. Having a joint holding facility for NRE account just makes it more attractive. See here for more details of how to open joint  NRE accounts.

7. Mandate Holder Benefits

This is one more unique advantage of NRE saving accounts which allows you to appoint a mandate to operate your account on your behalf. The mandate is nothing but authorization is given to a person to operate the customer's bank account on his behalf. Banks like ICICI and HDFC issues free cheque books and ATM cards for mandate holders. Many NRIs make their parents as mandate holder so that they can access the fund when they need. Here is a guide to tell you how to appoint a mandate holder in the NRE account.

8. Investment Benefits

Many banks like HDFC and Axis Bank allows NRIs to invest in Mutual funds by linking their NRE saving account to Investment savings account.

9. NRI Advantage

Since many Indian banks now have a global offering, opening an NRI account allows them to handpick exclusive offers catering to your needs both in India and abroad.

10. Accessibility Advantage

NRI saving account usually comes with International Debit card, at least, I know that HDFC bank, Kotak Mahindra and ICICI does provide an International debit card to NRE account holder. This gives you the unique accessibility advantage of shopping worldwide, booking air tickets online, buying health and life insurance, and withdrawing cash abroad. 

Though beware, exchange rates are not best and there are charges associated with international transactions especially cash withdrawal.

Here is a brief summary of what is NRE account and some of its important features.

That's all about the benefits and advantages of an NRE saving account and fixed deposit. As I said, it's a unique account for NRI and every Nonresident Indian should take advantage of NRE accounts. The most important feature is the tax benefits it offers which can result in more than 10% yield in fixed deposits, which is the best, no-risk investment option in my opinion. NRE accounts are also the most convenient way to use your foreign earnings in India and it also fully and freely repatriable.

Other NRE Fixed Deposit articles you may like

• Does Interest on NRE Fixed Deposit is Taxable?
• Can you add a nominee to your NRE or NRO Account?
• Difference between Resident and NRE fixed deposit
• When is a good time to interest in an NRE fixed deposit?
• Difference between Fixed and Recurring Deposit
• Can you Break NRE Fixed Deposit prematurely?
• Can you Open a Joint NRE or NRO Account with family?
• How to open an NRE account in Singapore?
• Which banks offer higher interest on NRE Fixed Deposits

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