According to the data published by the Reserve Bank of India, deposits made by NRIs stood at $130.4 billion at the end of the financial year 2019, and the apex bank is projecting steady growth in this fiscal year also. Now, NRIs who are looking to diversify their investment portfolio in the country can invest by opening an NRI account or NRI fixed deposits.
NRI deposit schemes offering high interest rates are offered by numerous financial institutions in India. Often, the interest rates offered on the deposits vary over time and in between financers.
Before trying to find out the most beneficial NRI fixed deposit, it is vital for an individual to know about deposit schemes and terms specific only to NRIs in India.
An NRI can’t open a standard savings account in the country like ordinary Indian citizens and invest their funds. They have to open an NRO account to invest.
NRO stands Non-Resident Ordinary (NRO) Account is a savings account. Through this account, NRIs can manage their investment made in the country.
Eligibility criteria: Any NRI can open this account jointly with an Indian citizen or a non-resident and deposit funds generated from income within the country only.
- Account-holders can repatriate their earning by paying a minimum TDS (tax deducted at source.)
- If any investor wants to reinvest his/her earning in India, then NRO account is the best option.
- It is entirely secure.
- Identity proof.
- NRI status proof.
- Foreign address proof which can be in the form of a copy of the resident permit or employment detail or student status or dependent visa status.
Now, NRIs who wants to invest their money into fixed deposits can avail this NRI account to do so.
Fixed deposit: A smarter investment
NRIs that are looking for an investment opportunity in this country can easily choose fixed deposits for its apparent benefits. Note that separate fixed deposits are offered to NRIs, which other individual will not be able to avail and vice versa.
Instead of just looking for the NRI FD offering the highest returns, here are the features which an individual should look for –
Risk-free: Fixed deposits are risk-free investments. Here the investors invest their money and on maturity withdraws it along with interest and doesn’t have to worry about any other factors.
Guaranteed return: The biggest USP of any fixed deposit is that it provides assured return. After the investment, it is locked for a period, and at the end of it, investors can avail a pre-determined return on their investment.
A great source of income: Now, the interest on FD can be earned in two ways, cumulative and non-cumulative. In case of cumulative interest, investors will benefit from their share of interest at the time of maturity. On the other hand, non-cumulative interest allows investors to choose between monthly, quarterly, half-yearly and annual interest returns which they can deposit to their NRI accounts. So, FDs provide another useful source of income to the investors.
Asset: Fixed deposits can be used as an asset when applying for a loan. Using it as collateral is considered as one of the best ways to take a loan against your fixed deposit.
Know your return: In fixed deposits, investors know their return or the money they will earn at maturity. For instance, a Fixed Deposit with Bajaj Finance will earn any investor up to 8.35% as assured returns on their investment. This interest rate is higher than on a lot of other investment instruments.
Apart from Fixed Deposits to NRIs, the NBFC also offers FDs for Overseas Citizen of India (OCI) and Person of Indian Origin (PIO). Investors can choose any tenor from 12 months to 36 months as per their needs.
Apart from its apparent benefits, NRIs can invest their money in fixed deposits and save money they have earned abroad. But before any NRI invests in a fixed deposit, he/she should be aware of the TDS on FD interest. The TDS slabs applicable on such earnings are –
- 31.2% – less than Rs.50 lakh.
- 34.32% – more than Rs.50 lakh and less than Rs.1 crore.
- 35.88% – more than Rs.1 crore.
It is vital for NRIs to know how and where to invest for higher returns on fixed deposits. Referring to the most reputed financers for starters can help. Apart from an NRO account among NRI accounts, such individuals can also open an NRE, FCNR, and RFC account to invest money in India.