Know All About NRE Account Interest Ratesby Shashank Bhaskar Finance Adviser
Savings, Current, Recurring, or Term Deposit Accounts are all options for NRE Accounts. Such accounts can only be opened by the non-resident individual, not by the power of attorney holder. NRE Accounts are denominated in rupees. FCNR Accounts get denominated in foreign currency.
Non-Residential Indians benefit from NRE accounts in various ways, including the capacity to manage foreign income earned outside of India, secure money transfers to meet their India commitments, and limitless repatriation. Furthermore, interest received on an NRE Account is tax-free in India, making it a compelling savings choice, particularly because many banks provide relatively competitive NRI Account interest rates.
NRE Account Interest Rates
NRE Savings interest rates should be the same as domestic savings deposits, rather than the LIBOR/SWAP rate for six-month maturity on US Dollar Deposits, as was previously the case. NRE Account interest rates for Fresh Repatriable Funds for one to three years should not exceed the LIBOR/SWAP Rates for US Dollar of the corresponding maturity plus 100 basis points.
The NRE Savings Account interest rates for three-year deposits would also apply to deposits of more than three years.
NRE Savings Account interest rates
Savings and Deposits are both possible with an NRE account. Most banks calculate interest on NRE Savings Accounts based on the account balance at the end of the day. Interest gets typically paid weekly or according to the bank's discretion. The interest rates on these accounts vary depending on the account balance slabs.
NRI Savings Account interest rates typically start at 3.5% per year. An NRE Fixed Deposit is a good choice if you wish to receive greater interest rates.
NRE Fixed Deposit interest rates
The interest rate on an NRE Fixed Deposit gets determined by the length of time you invest. For 1-to-5-year terms, private and public sector banks commonly provide interest rates starting at 3.5 % per annum. If you want to balance your portfolio of high-risk assets with a lower-risk asset, Fixed Deposits are the way to go.
An NRE Account's balance and interest earned are fully repatriable. In India, the interest earned in this is also tax-free. Tax deducted at source does not apply to NRE Savings and Fixed Deposit Accounts, unlike other Accounts in India. This account's funds can get moved to a Non-Resident Ordinary Account and the country of domicile. On the other hand, TDS applies to the NRO Account interest rate.
Control of NRE Accounts
A person who holds a Power of Attorney on behalf of an NRI/PIO can operate an NRE Account if the transactions are limited to withdrawals for local payments. If the account holder is eligible to invest in India, the authorised dealer branch may allow a power of attorney to administer the account to enable such investments.
However, the resident power of attorney holder cannot repatriate funds held in an NRE Account under any circumstances other than the account holder.
Created on Jan 14th 2022 03:15. Viewed 120 times.