NRE vs NRO Fixed Deposits: Key differences explained — compare FD rates of SBI, HDFC Bank, PNB and Axis Bank
Here's a comparison of NRE and NRO accounts, along with the latest interest rates offered by leading lenders such as State Bank of India, HDFC Bank, Punjab National Bank and Axis Bank on fixed deposits with tenures ranging from five to 10 years.
For Non-Resident Indians (NRIs), Overseas Citizens of India (OCIs) and Persons of Indian Origin (PIOs), Non-Resident External (NRE) and Non-Resident Ordinary (NRO) accounts are among the most popular options for investing in India. Both accounts allow deposits and withdrawals in Indian rupees, but they serve different purposes depending on the source of funds used for investment.
Here's a comparison of NRE and NRO accounts, along with the latest interest rates offered by leading lenders, including State Bank of India (SBI), HDFC Bank, Punjab National Bank (PNB) and Axis Bank on fixed deposits (FDs) with tenures ranging from five to 10 years.
NRE vs NRO Accounts: Key Differences
The primary distinction between the two accounts lies in the origin of the money being deposited. NRO accounts are meant for managing income earned within India, such as rent, dividends or pensions, whereas NRE accounts are designed for parking income earned outside India.
Another major difference is taxation. Interest earned on NRO accounts is taxable in India and attracts Tax Deducted at Source (TDS). In contrast, interest earned on NRE accounts is exempt from income tax in India.
The repatriation rules also differ. Funds held in an NRE account, including both principal and interest, can be freely repatriated abroad. For NRO accounts, repatriation is permitted up to USD 1 million per financial year, subject to applicable taxes and regulatory conditions.
The tenure requirements are also different. NRE fixed deposits generally have a minimum maturity period of one year and can extend up to 10 years, while NRO fixed deposits can be opened for as little as seven days, depending on the bank.
Latest NRE and NRO FD Interest Rates
Most banks currently offer identical interest rates on NRE and NRO fixed deposits for comparable tenures. The following rates apply to deposits of less than ₹3 crore with maturities between five and ten years.
- State Bank of India (SBI): Offers 6.05% interest on both NRE and NRO FDs with tenures ranging from 5 to 10 years.
- Punjab National Bank (PNB): Provides 6.00% interest on NRE and NRO fixed deposits for 5 to 10 years.
- HDFC Bank: Offers 6.15% interest on both NRE and NRO FDs for deposits with tenures of 5 years and 1 day to 10 years.
Axis Bank: Pays 6.50% interest on NRE and NRO fixed deposits with tenures between 5 and 10 years for deposits below ₹3 crore.
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