As per Hindu Business Online, NRI deposits in FY2016 increased by 13.65% compared to FY2015. NRI deposit inflows in FY2016 amounted to $15.977 billion ($14.057 billion in FY2015). With such an increase, more and more NRIs are obviously looking to invest in Indian market. Although there are multiple investment products for NRIs, fixed deposit has always been the most favored products especially by non-risk taking investors.
Definition of NRI Deposit: When non-resident Indian makes foreign currency deposit in an Indian bank, it is called as NRI deposit.
Let’s understand how much NRI will earn on 5 year fixed deposit on investment of Rs. 5 Lacs & 10 Lacs. Interest compounding used is quarterly, which is used by most of the banks.
|Bank Name||Interest Range Offered to NRI||Maturity Value after 5 years in INR for 5 Lac FD||Maturity Value after 10 years in INR for 10 Lac FD|
|Punjab & Sind Bank||7.25 - 7.40%||721424||2081811
|Karnataka Bank, HDFC, UCO & IndusInd Bank||7.25 - 7.50%||724974||2102349
|Kotak Mahindra||4 - 7.50%||724974||2102349
|Oriental Bank of Commerce||7 - 7.15%||712621||2031317
|Bank of India, Dena, IDBI||7.25 - 7.30%||717890||2061468
|Vijaya Bank, SBH||7 - 7.50%||724974||2102349
|South Indian Bank||7.3 - 7.55%||726755||2112692
|Allahabad Bank, SBI, SBBJ,Indian Bank, Andhra Bank, PNB||7 - 7.25%||716130||2051370
|State Bank of Mysore||7.50 - 7.6%||728540||2123084
|Union Bank of India||7.25 - 7.65%||730329||2133527
|Canara Bank||7 - 7.50%||724974||2102349
|SBT||6.75 - 7.25%||716130||2051370
|Karur Vysya Bank||7.35%||719655||2071615
|Syndicate Bank||6.75 - 7.50%||724974||2102349
|State Bank of Patiala||7.37 - 7.57%||727468||2116843
Note: Maturity amount increases when tenure is long. And higher the investment amount, higher would be the returns.
However FD (also called as term deposit) scores higher when it comes to security and return on investment. Also, if you are thinking to continue earning interest through savings account then remember that returns are on a lower side compared to fixed deposit. So FD is highly recommended to no-risk taking investors. Check out fixed deposit for residential Indians.
Requisites and Features of NRI FD:
- Accounts can be opened in NRE and NRO variants
- Money can be deposited with any convertible currency
- Minimum term is 1 year
- Minimum deposit amount is set by each bank
- On premature withdrawal, no interest is paid and small penalty is charged
- Partial withdrawal is also possible
- Joint account is allowed provided another person is also a non-resident
- Overdraft is also possible and is typically in the range of 85%-90% of the deposit amount
- Maturity amount along with the interest is fully repatriable
- If individual is from Pakistan or Bangladesh, then pre-approval is required from RBI
- Auto renewal option is possible
Above pre-requisities varies for each bank.
Other investment options for NRI in India:
Depending on the investment horizon and risks, NRI can invest money in India. We will divide NRIs into two broad categories:
- Risk takers
- Non-risk takers
For individuals who are ready to take risks to get high returns, following are the recommended investment products.
- Mutual Fund – Highly recommended, as it is managed by professionals and highly qualified fund managers.
- Direct Equities – Requires very active involvement
- Real estate
- Certificate of deposit
There are many other zero risk investment avenues for NRIs such as:
- Bank FD (as mentioned above)
- Government bonds and securities
- National Pension Scheme
NRI FD is best recommended for whom?
For non-risk taking individuals, fixed deposit is recommended since it offers safety and good returns.