Investment opportunity for NRIs knocking on the doors of Indian Banks

With the latest deregularisation of NRE deposits rates by RBI, it has brought to light a brilliant opportunity for NRIs to invest in India. More and more banks have revised their NRE TD’s rates thereby making NRE deposits much attractive in terms of returns overseas.
NRE TD’s are suddenly in the limelight because of the following features:

• Returns are tax free in India and

• Balances in these deposits are freely repatriable abroad.

More so, new generation private sector banks like Kotak Mahindra Bank are offering as high as 9.60 percent (annualised yield) for 1-year deposits. Also, customers can book this online through the banks net banking module without any documents from anywhere across the globe. What’s more, there is no premature penalty charged by the bank if the customer withdraws these deposits before the completion of the term. However, the RBI restriction of no interest to be paid if the NRE deposit is held for less than 1-year remains.  Below is a brief comparison of returns across various NRE deposits:

NRE deposit rates

Looking at the above comparison, NRE TD’s are a big opportunity both for the customer and the bank due to its repatriability and tax free return aspect.

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