Why NRE FDs are the NRI favourite
An NRE (Non-Resident External) fixed deposit wins on two counts no resident FD can match for an NRI: the interest is completely tax-free in India with zero TDS, and the entire deposit plus interest is fully repatriable — you can move the maturity proceeds back abroad without the USD 1 million annual cap that limits NRO funds. For a non-resident wanting a safe rupee return, that combination is hard to beat. If you also earn rent or dividends in India, you will need an NRO account alongside — the difference is explained in our NRE vs NRO guide.
How NRE FD interest is calculated
Banks compound NRE fixed deposits quarterly, exactly like resident FDs, so the maturity value is:
where P is your deposit and r the annual rate. The calculator above uses this same formula, so it matches bank NRE FD tables within a rupee or two. There is no senior-citizen premium on NRE deposits — every depositor gets the standard card rate.
Worked example
A ₹10,00,000 NRE FD at 7% for 2 years matures at ₹11,48,882 — about ₹1,48,882 of interest, and none of it taxed in India. The same amount in an NRO FD would suffer 30% TDS on the interest, leaving you to claim relief through a return or DTAA. That gap is the whole case for routing foreign earnings through the NRE side.
Indicative NRE FD rates across major banks
| Bank | 1 year | 2–3 years | 5 years |
|---|---|---|---|
| State Bank of India (SBI) | 6.50% | 6.75% | 6.50% |
| HDFC Bank | 6.60% | 7.00% | 6.75% |
| ICICI Bank | 6.70% | 7.00% | 6.90% |
| Axis Bank | 6.70% | 7.10% | 7.00% |
| Kotak Mahindra Bank | 6.60% | 7.00% | 6.20% |
| Small finance banks (typical) | 7.50% | 7.75%–8.25% | 7.50% |
Indicative only — rates as of June 2026. NRE FD rates change frequently and the senior-citizen premium does not apply. Always verify the current card rate directly with the bank before booking.
The cross-border tax angle (read this if you live in the US)
NRE interest is exempt in India, but that does not make it tax-free everywhere. The US taxes its residents on worldwide income, so a US-resident NRI generally reports NRE FD interest on their US tax return; similar rules apply in the UK and Canada. Because India does not tax the interest, there is no India tax to claim as a foreign tax credit, which surprises many first-time NRE depositors. The full picture — TDS on NRO, DTAA relief and RNOR status — is in our NRI tax slab guide. To move money in cheaply to fund the FD, compare remittance routes in send money to India.