Here’s a confession. When I was living in the US, my money was sitting in a Chase savings account earning 0.01% interest.
Not 1%. Not 0.1%. Zero point zero one percent.
Meanwhile, NRE Fixed Deposits in India were offering 7% and above. Tax free.
I did the math one evening in 2013. On a deposit of Rs 50 lakhs, the difference was staggering.
My Chase account would earn me roughly $50 a year. The same amount in an NRE FD in India? About Rs 3.5 lakhs a year. And not a single rupee of tax on it.
That night, I opened my first NRE FD. I haven’t looked back since.
If you’re an NRI and your money is sitting idle in a low interest foreign savings account, this guide is for you.
I’ve spent years tracking these rates, comparing banks, and sharing what I learn with our BacktoIndia WhatsApp community. This is the most honest, community tested breakdown of NRI FD rates you’ll find anywhere.
Why NRI Fixed Deposits Are a Big Deal
Let me put this in perspective.
The average savings account in the US pays less than 0.5% per year.
High yield savings accounts in the US offer about 4% to 5% right now, which sounds good until you remember that’s taxable income.
NRE Fixed Deposits in India? You’re looking at 6.5% to 7.5% per year.
And the interest is completely exempt from Indian income tax. No TDS. No deductions. The full amount lands in your account.
For US based NRIs, there’s a catch. You still need to report and pay tax on this interest in the US.
But the rate difference is so significant that even after US taxes, many NRIs come out ahead. Talk to your CPA about this. And if you need to understand how Indian income fits into your US tax filing, we have a detailed guide on that.
For NRIs in the UAE, where there’s no income tax on individuals? NRE FDs are basically free money. Zero tax in India. Zero tax in UAE. The full 7% is yours.
NRE vs NRO vs FCNR Fixed Deposits: Quick Comparison
Before we look at rates, you need to understand the three types of NRI FDs. Each one works differently.
| Feature | NRE FD | NRO FD | FCNR FD |
|---|---|---|---|
| Currency of deposit | INR (converted from foreign currency) | INR (Indian income or foreign remittance) | Foreign currency (USD, GBP, EUR, etc.) |
| Minimum tenure | 1 year | 7 days | 1 year |
| Maximum tenure | 10 years | 10 years | 5 years |
| Interest rate range | 6.00% to 7.50% p.a. | 6.00% to 7.50% p.a. | 3.50% to 5.50% p.a. |
| Tax on interest in India | Zero. Completely tax free | 30% TDS (reducible under DTAA) | Zero. Completely tax free |
| Repatriation | 100% freely repatriable | Up to USD 1 million per year | 100% freely repatriable |
| Currency risk | Yes. Rupee fluctuation applies | Yes | No. Deposit stays in original currency |
| Senior citizen benefit | Not available for NRIs | Not available for NRIs | Not available for NRIs |
| Premature withdrawal | Allowed (penalty applies, zero interest if before 1 year) | Allowed (penalty applies) | Allowed (zero interest if before 1 year) |
The quick version?
NRE FD is for your foreign earnings. Tax free. Best rates. But you carry rupee risk.
NRO FD is for your Indian income (rent, dividends, pension). Taxable. Similar rates. Limited repatriation.
FCNR FD is for parking foreign currency without converting to rupees. Lower rates but zero currency risk. Tax free.
If you need a deeper understanding of how these accounts work, check out our complete guide on NRI accounts in India.
Best NRE Fixed Deposit Rates (2026)
This is what most NRIs are looking for. The best rates on NRE FDs from major banks.
I’ve organized this by bank category so you can compare apples to apples. Rates shown are for deposits below Rs 2 crore, which covers the vast majority of NRIs.
Major Private Banks
| Bank | 1 Year | 2 Years | 3 Years | 5 Years | Min Deposit |
|---|---|---|---|---|---|
| HDFC Bank | 6.60% | 7.00% | 7.00% | 7.00% | Rs 10,000 |
| ICICI Bank | 6.70% | 7.00% | 7.00% | 7.00% | Rs 25,000 |
| Axis Bank | 6.75% | 7.10% | 7.10% | 7.00% | Rs 10,000 |
| Yes Bank | 7.25% | 7.50% | 7.25% | 7.00% | Rs 10,000 |
| IndusInd Bank | 7.25% | 7.50% | 7.25% | 7.00% | Rs 10,000 |
| Kotak Mahindra | 6.50% | 7.00% | 7.00% | 6.50% | Rs 5,000 |
| Federal Bank | 6.60% | 6.80% | 6.80% | 6.30% | Rs 5,000 |
Major Public Sector Banks
| Bank | 1 Year | 2 Years | 3 Years | 5 Years | Min Deposit |
|---|---|---|---|---|---|
| SBI | 6.50% | 6.80% | 6.50% | 6.25% | Rs 1,000 |
| Bank of Baroda | 6.50% | 6.75% | 6.75% | 6.50% | Rs 1,000 |
| PNB | 6.50% | 6.75% | 6.50% | 6.25% | Rs 10,000 |
| Canara Bank | 6.50% | 6.70% | 6.50% | 6.25% | Rs 1,000 |
| Bank of India | 6.50% | 6.60% | 6.50% | 5.90% | Rs 1,000 |
Small Finance Banks (Higher Rates)
| Bank | 1 Year | 2 Years | 3 Years | 5 Years | Min Deposit |
|---|---|---|---|---|---|
| IDFC FIRST Bank | 6.50% | 7.25% | 7.25% | 7.00% | Rs 10,000 |
| Ujjivan SFB | 7.00% | 7.10% | 7.00% | 6.50% | Rs 1,000 |
Important: These rates change frequently. Banks revise them every few weeks. Always verify the current rate on the bank’s official website before booking your FD. The rates above are indicative as of early 2026.
My take: Yes Bank and IndusInd Bank consistently offer the highest NRE FD rates. But before you rush to open an account, read the next section.
Best NRO Fixed Deposit Rates (2026)
NRO FD rates are generally similar to domestic FD rates. The key difference is the 30% TDS on interest.
| Bank | 1 Year | 2 Years | 3 Years | 5 Years |
|---|---|---|---|---|
| SBI | 6.50% | 6.80% | 6.50% | 6.25% |
| HDFC Bank | 6.60% | 7.00% | 7.00% | 7.00% |
| ICICI Bank | 6.70% | 7.00% | 7.00% | 7.00% |
| Axis Bank | 6.75% | 7.10% | 7.10% | 7.00% |
The rates look similar to NRE FDs. But after 30% TDS, your effective return on an NRO FD drops significantly.
Example: 7% NRO FD interest minus 30% TDS = effective 4.9% return.
Compare that to 7% NRE FD interest with zero tax = 7% effective return.
The math is clear. Keep your foreign earnings in NRE. Use NRO only for Indian income that has to go there anyway. And make sure you understand how TDS works for NRIs so you can claim refunds where applicable.
If your country has a DTAA with India, you may be able to get the TDS rate reduced. For US NRIs, this can mean TDS at roughly 15% instead of 30% on certain income types. You’ll need to provide your Tax Residency Certificate and Form 10F to the bank.
Best FCNR Fixed Deposit Rates (2026)
FCNR rates are lower than NRE rates. That’s because they’re denominated in foreign currency, and international interest rates are different from Indian rates.
| Bank | USD (1 Year) | USD (2 Years) | USD (3 Years) | USD (5 Years) |
|---|---|---|---|---|
| SBI | 4.55% | 4.30% | 3.85% | 3.55% |
| ICICI Bank | 4.40% | 4.25% | 3.80% | 3.40% |
| HDFC Bank | 4.50% | 4.30% | 3.85% | 3.50% |
| Axis Bank | 4.25% | 4.10% | 3.75% | 3.40% |
| IDFC FIRST | 4.65% | 4.50% | 4.00% | 3.65% |
| Federal Bank | 4.50% | 4.30% | 3.80% | 3.50% |
Rates vary by currency. GBP and EUR rates are typically different from USD rates. Check with your specific bank.
The question I hear most often in our community. “Should I go with NRE FD at 7% or FCNR at 4.5%?”
On the surface, NRE wins easily. But here’s what most people miss.
The Currency Risk Math Nobody Shows You
Let me walk you through a real scenario.
You deposit $10,000 into an NRE FD at 7% when the exchange rate is Rs 85 per dollar. Your deposit is Rs 8,50,000.
After 2 years at 7% (compounded quarterly), your FD grows to approximately Rs 9,71,000.
Now you want to repatriate. But the rupee has depreciated to Rs 90 per dollar (very possible given historical trends).
Rs 9,71,000 divided by Rs 90 = $10,789.
Your actual dollar return? About 7.89% over two years. Or roughly 3.9% per year in dollar terms.
Now compare FCNR. Same $10,000 at 4.5% for 2 years.
Your return? $10,914. A clean 4.5% annual return in dollars. No currency guessing.
The NRE FD gave a slightly lower dollar return in this scenario because the rupee depreciated. If the rupee had stayed stable or appreciated, NRE would have won comfortably.
This is the trade off. NRE gives you higher headline rates but currency risk. FCNR gives you lower rates but certainty.
In our community, the experienced NRIs typically split between both. They put money they plan to use in India (home purchase, kids’ education, parents’ expenses) into NRE FDs. They put money they might repatriate into FCNR.
How to Choose the Right Bank for Your NRI FD
Rates are important. But they’re not everything. Here’s what our community has learned through years of experience.
Don’t Chase the Highest Rate Blindly
Yes Bank and IndusInd Bank often have the highest NRE FD rates.
They’re legitimate, well regulated banks. But some community members have shared that customer service for NRIs can be inconsistent.
If you can’t reach your bank when you need to break an FD or sort out a repatriation issue, that extra 0.25% doesn’t matter.
Prioritize Digital Access
You’re managing this FD from across the world. The bank’s NRI portal and mobile app matter more than you think. ICICI, HDFC, and Axis lead here.
Their NRI banking platforms let you open FDs, break them, reinvest, and manage everything without calling anyone.
SBI? Great rates. Massive branch network. But their digital platform for NRIs still has room to improve, based on what our members report.
Check Premature Withdrawal Terms
Life happens. You might need to break your FD early. Most banks charge a penalty of 0.5% to 1% on premature closure.
And here’s the critical rule.
If you break an NRE FD before completing 1 year, you earn zero interest. Not reduced interest. Zero. This is an RBI rule that applies to all banks.
So don’t lock money into an NRE FD that you might need in 6 months.
Consider the Bank’s Presence in Your Country
If you’re in the US, SBI has branches in New York, Chicago, and Los Angeles. ICICI has offices in several US cities. Bank of Baroda has a presence too. Having a local branch can help with documentation, disputes, and account issues.
If you’re in the UAE, ICICI, Axis, and SBI have strong local partnerships with exchange houses. Bank of Baroda UAE is another option.
My Bank by Bank Recommendation
Based on what I’ve seen, experienced, and heard from thousands of NRIs in our community.
| Your Priority | Recommended Bank | Why |
|---|---|---|
| Best digital experience | ICICI Bank | NRI portal is best in class. Money2India integration. Video KYC works smoothly. |
| Highest NRE FD rates | Yes Bank or IndusInd Bank | Consistently offer top rates. Good for NRIs comfortable with mid-tier private banks. |
| Government backed safety | SBI | India’s largest bank. Peace of mind for large deposits. |
| Best all around NRI services | HDFC Bank | Premium relationship management. Solid FD rates. Good digital platform. |
| Best for UAE NRIs | Axis Bank | Strong UAE partnerships. Axis Remit service. Competitive rates. |
| Highest FD rates with good service | IDFC FIRST Bank | Strong FD rates. UPI on international SIMs. Growing NRI services. |
| Best for Kerala NRIs | Federal Bank | Excellent NRE FD rates. Strong branch network in Kerala. |
And honestly? You don’t have to pick just one. Many smart NRIs in our group spread their FDs across 2 to 3 banks. Primary savings at a big private bank. FDs at whichever bank offers the best rate at the time.
Smart NRI FD Strategies from Our Community
These are real strategies used by real NRIs. Not textbook advice.
Strategy 1: The FD Ladder
Instead of putting Rs 50 lakhs into one FD for 3 years, split it.
Rs 10 lakhs in a 1 year FD. Rs 10 lakhs in a 2 year FD. Rs 10 lakhs in a 3 year FD. Rs 10 lakhs in a 4 year FD. Rs 10 lakhs in a 5 year FD.
Every year, one FD matures. You reinvest it at whatever rate is highest at that time. You always have access to some funds without breaking everything. And you’re never fully locked in at a single rate.
Several NRIs in our group swear by this approach. It balances liquidity with returns beautifully.
Strategy 2: The Rate Arbitrage
Monitor NRE FD rates across banks. When one bank offers a special rate (banks do this periodically), book your FD there. You don’t have to do all your banking at that bank. Just the FD.
A community member from New Jersey told me he has FDs at four different banks. His primary NRE savings is with ICICI.
But his FDs are wherever the best rate is. Over 5 years, he estimates this strategy earned him an extra Rs 2 to 3 lakhs compared to staying with one bank.
Strategy 3: The Pre Return Buildup
Planning to move back to India in 2 to 3 years? Start building NRE FDs now.
Here’s why. Once you return and become a resident, your NRE FDs continue until maturity. They still earn the NRE rate. But any new FDs you book after becoming a resident earn resident rates (which are similar, but the interest becomes taxable).
So the smart move is to lock in as many tax free NRE FDs as possible before you return. Several members who did this saved Rs 50,000 to Rs 1 lakh in taxes in their first year back.
When you return, your NRE account eventually needs to be converted. Read our guide on what happens after you lose NRI status to plan this transition correctly.
Strategy 4: The FCNR Plus NRE Split
Not sure when you’re coming back? Or worried about the rupee?
Put 50% in FCNR (dollar protection). Put 50% in NRE FDs (higher returns).
If the rupee appreciates, your NRE portion does well. If it depreciates, your FCNR portion protects you. You’re hedged either way.
Things Nobody Tells You About NRI FDs
These are the real world gotchas that our community has discovered.
1. No senior citizen rates.
Even if you’re 65 years old, NRI FDs don’t qualify for the additional 0.50% that resident senior citizens get. This surprises a lot of older NRIs.
2. Auto renewal can hurt you.
Most banks auto renew NRE FDs at maturity. The renewed FD will be at whatever rate the bank offers at that time, which might be lower. Set a calendar reminder to manually review and decide at maturity.
3. Interest payout options matter.
You can choose cumulative (interest reinvested, compounding works for you) or non-cumulative (interest paid out monthly, quarterly, or annually). Cumulative is better for growth. Non-cumulative is better if you need regular income.
4. FBAR reporting for US NRIs.
Every NRI FD in India is a foreign financial account. If your total balance across all Indian accounts exceeds $10,000 at any point in the year, you must file an FBAR. The penalty for not filing can be $10,000 per account.
5. NRE FD is covered by deposit insurance.
DICGC (Deposit Insurance and Credit Guarantee Corporation) covers deposits up to Rs 5 lakhs per depositor per bank. This covers your NRE and NRO FDs. If you have Rs 50 lakhs, spreading across multiple banks gives you more insurance coverage.
6. Loan against NRE FD is possible.
Most banks offer loans up to 80% to 90% of your NRE FD value. This is useful if you need funds in India without breaking your FD.
7. You can book NRE FDs online.
No need to visit a branch. If you have an active NRE account, you can typically book an FD through internet banking in under 5 minutes.
8. NRO FD TDS can be reduced.
If your total Indian income is below the taxable threshold, you can apply for a lower TDS certificate. If you’ve overpaid TDS, you can claim a refund by filing your ITR.
FAQs
What is the best NRE FD rate right now?
As of early 2026, the highest NRE FD rates are offered by Yes Bank and IndusInd Bank at up to 7.50% p.a. for the 2 year tenure. Among larger banks, HDFC, ICICI, and Axis offer rates between 6.60% and 7.25% depending on tenure. Rates change frequently, so always verify before investing.
Is NRE FD interest really tax free?
Yes. Under Section 10(4)(ii) of the Income Tax Act, interest earned on NRE deposits (savings and FD) is completely exempt from income tax in India. No TDS is deducted. However, this interest may be taxable in your country of residence. US NRIs must report it on their IRS returns.
What is the minimum tenure for an NRE FD?
1 year. This is an RBI rule. If you withdraw before 1 year, you earn zero interest. NRO FDs have a lower minimum tenure of 7 days.
Can I open an NRE FD from abroad?
Yes. If you have an NRE savings account, you can book FDs through the bank’s internet or mobile banking platform. You don’t need to visit India.
What happens to my NRE FD when I return to India?
Existing NRE FDs continue until maturity at the NRE rate. After becoming a resident, any new FDs will be at resident rates and the interest will be taxable. You can also convert matured NRE FDs to an RFC (Resident Foreign Currency) deposit.
Can OCI holders open NRE FDs?
Yes. NRIs, OCIs, and PIOs can all open NRE, NRO, and FCNR Fixed Deposits with Indian banks.
Is it better to invest in NRE FD or mutual funds?
Different risk profiles. NRE FDs offer guaranteed returns with zero market risk. Indian mutual funds can offer higher returns but with market volatility. For a comprehensive look at where to put your money, check our guide on best investment options for NRIs.
Can I transfer money from NRO to NRE to book an NRE FD?
No. NRO to NRE transfers are not allowed. NRE accounts can only be funded from foreign remittances. This is one of the most common misconceptions.
How is interest calculated on NRE FDs?
Most banks compound NRE FD interest quarterly. Some compound it half yearly. Quarterly compounding gives you slightly higher effective returns. Check with your bank for their specific compounding frequency.
What is the penalty for premature withdrawal?
Typically 0.5% to 1% deducted from the applicable rate. And remember, if you break an NRE or FCNR FD before 1 year, you get zero interest. No exceptions.
What I Personally Do
I’ll be transparent about my own approach.
I keep my NRE FDs spread across two banks. One large private bank for convenience and a smaller bank that consistently offers higher rates. I review rates every 6 months. I use the FD ladder strategy so I’m never fully locked in.
For the money I might send back abroad someday, I use FCNR deposits in USD. The rate is lower. But I sleep better knowing my dollars are still dollars.
And every year without fail, I report all of it on my tax returns. Both in India and in the US when I was there. Compliance isn’t optional. Especially when you’re dealing with cross border taxation.
Final Thoughts
NRI FDs are one of the simplest, safest ways to earn solid returns on your savings. The rates are significantly better than what most foreign banks offer. The tax benefits on NRE and FCNR deposits are genuine.
But don’t just chase the highest number on a comparison chart. Consider the bank’s reliability. Consider digital access. Consider your currency outlook. Consider your return timeline.
And most importantly, get your accounts set up properly. NRE for foreign earnings. NRO for Indian income. FCNR for currency protection. This foundation matters more than an extra 0.25% on your FD rate.
If you’re planning your move back, join our WhatsApp community at https://backtoindia.com/groups – 20,000+ NRIs helping each other with real, lived experience. It’s free and volunteer-run.
Disclaimer: This article is for informational purposes only. I am not a financial advisor. Interest rates change frequently and the rates mentioned are indicative as of early 2026. Always verify current rates on the bank’s official website before making investment decisions. Consult a qualified financial professional for advice specific to your situation.
Sources:
- Reserve Bank of India (RBI) – Master Direction on Interest Rates on Deposits – rbi.org.in
- SBI NRI Services – sbi.co.in
- ICICI Bank NRI Banking – icicibank.com/nri-banking
- HDFC Bank NRI Services – hdfcbank.com
- Axis Bank NRI Banking – axisbank.com
- Policybazaar NRE FD Rates – policybazaar.com
- Income Tax Act, Section 10(4)(ii) – NRE Interest Exemption
- DICGC – Deposit Insurance Coverage – dicgc.org.in
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