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When you have saved up enough funds in your savings account, you can use the opportunity to earn higher interest rates on them. As opposed to the essential 3 per cent to 4 per cent interest you earn on the savings, and you can open fixed deposits. The fixed means that your deposits can be maintained for a specific period, and which is why FDs are called term deposits. Both resident and non-resident Indians can open these deposits. If you are seeking information on NRI fixed deposit, this article will guide you.
Type of FDs There are three kinds of NRI FD you can open as an NRI – NRE FD, NRO FD, and FCNR FD. While the first two are opened in INR, the third one is maintained in foreign currencies. Opening foreign currency deposit is as safe as opening NRE or NRO deposits since you need not worry about currency fluctuation on maturity. Currencies of deposits While NRO deposit is a rupee one, NRIs can open FDs in different international currencies. These include the US dollar, Great Britain Pound Sterling, European Euro, Japanese Yen, Australian Dollar, New Zealand Dollar, Singapore Dollar, and Hong Kong Dollar. Nowadays, even Swedish Krona, Danish Krone, and Swiss Francs are acceptable currencies. Investment term Usually, NRI FDs can be opened anywhere between seven days to a maximum of 10 years. Remember, this term is applicable only for NRE and NRO deposits. If there is a foreign currency deposit, the minimum and maximum investment tenure are between one to five years. Interest rates The NRI fixed deposit interest rates depend on the type of deposit you own. Since you would be depositing in foreign currencies in your FCNR and NRE FD, the interest rate differs as they are set based on LIBOR or SWAP rates. If it is an NRO deposit, most banks provide the same interest rates as opposed to resident Indian FD holders as the NRO account is primarily a rupee account. Joint holdings All kinds of NRI deposits can be held jointly. However, the individual with whom you open the deposit can differ based on the type of FD you open. For instance, if it is an NRE or FCNR deposit, the joint holder should be an NRI. Meanwhile, if it is an NRO FD, the other owner should be an Indian resident. Premature withdrawal Although FDs last through the deposit term, some banks allow you to withdraw the NRI deposits before the term ends. You can withdraw the deposits in case of financial emergency. However, you should pay the penalty for the same, which is usually a per cent of the NRI fixed deposit interest rates earned. Also, the premature withdrawal penalty gets waived off after a specific period of holding the deposits.
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