January 28, 2012

NRE Deposit Rates

Now, as I write this blog, the interest rates on NRE deposits are extremely good with some of the banks like - HDFC, IDBI, ICICI Bank etc., paying as much as 9.50% per annum. Both principal amount as well as the interest earned can be repatriated. The interest earned is tax-free i.e., there is no Tax Deducted at Source (TDS) on these interest earnings when the bank repays you.

Reserve Bank of India (RBI) deregulated interest paid on NRE deposits in December 2011. Prior to that all the banks were paying very small rate of interest for NRE deposits. With the India Rupee depreciating to a new low, one of the steps taken by RBI to increase the inflow of remittance into India.

Just look for good low e.g., 1USD= >  51 INR or 1SGD= > 40 INR and you can safely start to place deposits in India with a bank that provides highest rate of interest. Period of deposit is a call that you have to take. But the outlook is INR is likely to appreciate. This may be an additional bonus if you want to repatriate say after one year. 

Most of these forward looking banks which offer good rates also have customer friendly ways to pick up your remittances, be it in the US, or Canada or Gulf or Singapore or Hong Kong etc.

Also, one more deposit which is always not well advertised is the NRE Recurring Deposits. Worth taking a look at it if you want to build your deposit base over a period of time.

Please leave any additional information that you may have for the benefit of this blog readers. Thanks

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