Non-resident Indians (NRI) / Overseas Citizen of India (OCI) / Person of Indian Origin (PIO) are always on the lookout for the most lucrative NRI deposits for investing. The current interest rate scenario in India allows them higher returns when compared to their country of work.
Considerations for NRIs
While all the major economies across the world are facing tough times, India is managing to cope up with the crisis well, thus offering better interest rates than other economies in the world. This is one of the reasons why NRI FD investments are a preferred investment option for most NRIs as they are always on the lookout for no to low risk investments with high returns. However, NRIs need to consider these points before investing in NRI deposits:
Repatriation: When opened under a Non-Resident External (NRE) account, the interest and principal both are repatriable whereas, under a Non-resident Ordinary (NRO) account, only the interest is freely repatriable. The principle is allowed only under certain conditions and only up to a limit of USD 1 million.
Exchange rate risk: NRO is the account usually allowed for various investments as it is denoted in Indian Rupees and has no exchange rate risk.
Taxation: Also while the NRE accounts and earnings are exempt from taxes, the returns from an NRO account is the same as that of a regular saving account. Also, the tax rate applicable to an NRO FDs is in the range of 31.2% to 35.88%, depending upon the annual interest earned on the deposit. Ensure you have your investment documents in place to avail a tax benefit under DTAA (Double Tax Avoidance Agreement).
Volatility: NRO FDs are accounted in Indian Rupees and cannot be repatriated. Hence there is no forex risk. Whereas NRE FDs are in Indian Rupee, hence repatriation will bring the foreign exchange volatility in play.
Origin of Funds: Only the funds originated in India can be used to create an NRO FD. NRE FDs require that the source of funds be external income. NRO accounts cannot be used to transfer money to an NRE account or create FDs.
Best No-Risk Investments
With the bank FDs now hovering close to 6% with possibilities of still going further down, company FDs such as Bajaj Finance FD offering higher returns than bank FDs are one of the best risk-free investment options in India. Use an FD return calculator to seek out the best tenor and deposit amount. The Fixed Deposit Calculator to determine the FD maturity amount.
Assurance: Bajaj Finance FDs are accorded the highest safety ratings of FAAA/Stable by CRISIL and MAAA/Stable by ICRA.
High-Interest Rate: Bajaj Finance offers one of the highest interest rates with up to 8.05% for a senior citizen for 48-month cumulative FD. If you are below 60 years, new customer, you can earn up to 7.80% 48-month cumulative FD. This investment also falls under the Double Tax Avoidance Agreement (DTAA).
Features: Look at availing easy and flexible tenors ranging from 12 to 60 months with online account creation and payments and redemption. You can use a single payment cheque to create multiple deposits of different amounts and tenors. This strategy is known as laddering of FDs and helps you earn better returns during volatility. You can also opt for renewal of your FD automatically in India Bajaj Finance and not miss any opportunity for earning higher interest.
Payouts: You can opt for periodic interest payouts which can be monthly, quarterly or bi-annual to reinvest elsewhere in India or utilise it for usage. As an investor, you can look at how much you will earn after a certain period of time and principal by utilising the FD return calculator.
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