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NRI Guide · August 2026

NRI Fixed Deposit Guide — NRE vs NRO vs FCNR: Which FD Should You Choose?

As an NRI, you can't just open a regular FD back home. Here's exactly how NRE, NRO and FCNR deposits differ in taxation, repatriation and currency risk — and which one fits your situation.

Pramod Kumar By Pramod Kumar  ·  B.Tech NIT Nagpur | M.Tech IIT Roorkee | Founder, BookmyFD  ·  August 17, 2026  |  10 min read

If you're a Non-Resident Indian, you're legally not allowed to hold a regular resident savings account or FD in India under FEMA (the Foreign Exchange Management Act). Instead, you need to choose between three very different account types — NRE, NRO and FCNR — and each one behaves differently when it comes to which currency it's held in, whether the interest is taxed, and how easily you can move the money back abroad.

This guide breaks down each option in plain terms, compares them side by side, explains repatriation and TDS rules, and walks through how to actually open one — so you can park your money in the right account instead of the default one your bank suggests.

NRI Fixed Deposit guide — NRE vs NRO vs FCNR comparison 2026
NRE, NRO and FCNR deposits each serve a different purpose for NRI investors.

📑 Table of Contents

  1. Why NRIs Need a Different Type of FD
  2. NRE FD — Features, Rates & Taxation
  3. NRO FD — Features, Rates & Taxation
  4. FCNR FD — Features, Rates & Taxation
  5. NRE vs NRO vs FCNR — Side-by-Side
  6. Indicative NRI FD Rates 2026
  7. Repatriation Rules Explained
  8. How to Open an NRI FD
  9. Smart Tips for NRIs
  10. Frequently Asked Questions

1. Why NRIs Need a Different Type of FD

Under FEMA, once your residential status changes to Non-Resident Indian, you can no longer operate a regular resident savings account or FD. Banks require you to convert existing resident accounts or open one of three designated NRI account types instead — the choice mainly comes down to where your money is coming from (foreign earnings vs Indian income) and what currency you want it held in.

✅ The one-line rule of thumb Foreign income you want to keep tax-free and fully movable → NRE. Indian income like rent or dividends → NRO. Want zero currency risk by staying in a foreign currency → FCNR.

2. NRE FD — Features, Rates & Taxation

A Non-Resident External (NRE) FD is meant for your foreign earnings. You remit money from abroad, it gets converted into and held in Indian Rupees, and it earns FD interest at Rupee rates.

FeatureNRE FD
Currency held inIndian Rupees (INR)
Source of fundsForeign income remitted to India
Interest taxable in India?No — fully exempt under Section 10(4)(ii)
RepatriationPrincipal and interest fully and freely repatriable
Joint holdingWith another NRI, or a resident relative on "former or survivor" basis
Currency riskYes — value in your home currency moves with the exchange rate
💡 Best for Parking foreign savings where you want tax-free interest and full flexibility to move the money back abroad whenever you like — but you're comfortable with Rupee exchange rate movement.

3. NRO FD — Features, Rates & Taxation

A Non-Resident Ordinary (NRO) FD is meant for income you earn within India — rent from a property, dividends, pension, or income from investments — even after you've become an NRI.

FeatureNRO FD
Currency held inIndian Rupees (INR)
Source of fundsIncome earned in India (rent, dividends, pension, etc.)
Interest taxable in India?Yes — fully taxable, with TDS deducted at source
RepatriationUp to USD 1 million per financial year, with Form 15CA/15CB
Joint holdingCan be held jointly with a resident Indian relative
Currency riskYes — Rupee-denominated
⚠️ TDS is steep on NRO interest Banks deduct TDS at 30% (plus applicable surcharge and cess) on NRO FD interest under Section 195 — much higher than the 10% TDS on a resident's FD. You can lower this if a Double Taxation Avoidance Agreement (DTAA) applies between India and your country of residence, by submitting a Tax Residency Certificate (TRC) and Form 10F. See our TDS on FD interest guide for how TDS works on FDs generally.

4. FCNR FD — Features, Rates & Taxation

A Foreign Currency Non-Resident (FCNR) FD is held entirely in a foreign currency — typically USD, GBP, EUR, AUD, CAD, JPY or a few others your bank supports. Your money is never converted into Rupees, so its value in that foreign currency never fluctuates with the exchange rate.

FeatureFCNR FD
Currency held inForeign currency (USD, GBP, EUR, etc.) — never converted to INR
Source of fundsForeign income remitted in foreign currency
Interest taxable in India?No — fully exempt, like NRE
RepatriationPrincipal and interest fully and freely repatriable
Joint holdingSame rules as NRE
Currency riskNone — held in the same foreign currency throughout
✅ Best for NRIs who want zero exposure to Rupee exchange rate swings and are comfortable earning a somewhat lower absolute rate, since FCNR rates track the interest rate environment of the foreign currency itself, not Indian rates.
Comparison of NRE NRO and FCNR fixed deposit accounts for NRIs
Choosing between NRE, NRO and FCNR comes down to the source of your funds and how much currency risk you want to take.

5. NRE vs NRO vs FCNR — Side-by-Side

🇮🇳 NRE FD

  • Currency: INR
  • For: Foreign income
  • Tax: Fully tax-free
  • Repatriation: Fully free

🏠 NRO FD

  • Currency: INR
  • For: Indian-sourced income
  • Tax: Fully taxable, 30%+ TDS
  • Repatriation: Capped at $1M/year

💵 FCNR FD

  • Currency: Foreign currency
  • For: Foreign income, zero FX risk
  • Tax: Fully tax-free
  • Repatriation: Fully free

6. Indicative NRI FD Rates 2026

BankNRE FD, 3 yr (p.a.)NRO FD, 3 yr (p.a.)FCNR USD, 3 yr (p.a.)
SBI6.75%6.75%4.10%
HDFC Bank7.00%7.00%4.25%
ICICI Bank7.00%7.00%4.20%

* Indicative rates as of August 2026. NRE/NRO rates track domestic FD rates at the same bank; FCNR rates depend on the foreign currency and change with global rate movements — always verify current rates before booking.

💡 Compare NRE and NRO rates before booking Since NRE and NRO FDs are both Rupee-denominated, compare rates the same way you would for a domestic FD — use BookmyFD's FD comparison tool across 40+ banks and NBFCs.

7. Repatriation Rules Explained

🔓

NRE & FCNR: fully free

Both principal and interest can be moved abroad at any time, in any amount, with no RBI approval needed.

🔒

NRO: capped at $1M/year

Repatriation from an NRO account — including sale proceeds of property or accumulated income — is capped at USD 1 million per financial year.

📄

Form 15CA/15CB required for NRO

You'll need to file Form 15CA (self-declaration) and, for larger amounts, Form 15CB (a CA certificate confirming tax has been paid) before remitting NRO funds abroad.

🏦

Bank-assisted process

Most banks with an NRI desk handle the remittance paperwork for you once you submit the required forms and KYC documents.

8. How to Open an NRI FD

1

Decide which account type fits your funds

Foreign earnings you want tax-free and freely movable → NRE. Indian income → NRO. Want zero currency risk → FCNR.

2

Gather your KYC documents

Passport, valid visa or OCI/PIO card, overseas address proof, PAN card, and passport-size photographs are typically required.

3

Choose a bank with a strong NRI desk

Most major Indian banks offer dedicated NRI banking services, including online account opening from abroad in many cases.

4

Fund the account via inward remittance

Transfer funds from your overseas bank account (for NRE/FCNR) or from your Indian income source (for NRO) to open the FD.

5

Add a nominee and set up a Power of Attorney if needed

A Power of Attorney lets a trusted person in India manage the account on your behalf for day-to-day banking needs.

9. Smart Tips for NRIs

🌍

Check DTAA benefits

If India has a Double Taxation Avoidance Agreement with your country of residence, you may reduce TDS on NRO interest by submitting a Tax Residency Certificate.

💱

Use FCNR to sidestep currency risk

If you're unsure about Rupee movement, FCNR removes that variable entirely — you'll get back exactly the currency you put in.

🏠

Route rental income into NRO

Any income sourced within India, including rent from property you still own, must go through an NRO account, not NRE.

📋

Keep FEMA compliance documents handy

Retain remittance certificates (FIRC) and account-opening documents — you may need them for repatriation or tax filing later.

🔁

Update your status if you return to India

Once you become a resident again, inform your bank promptly — continuing to operate NRE/NRO/FCNR accounts as a resident violates FEMA rules.

10. Frequently Asked Questions

What is the difference between NRE and NRO FD?
An NRE FD holds your foreign earnings, converted to and held in Indian Rupees, with interest that is fully tax-free in India and both principal and interest freely repatriable abroad. An NRO FD holds income earned in India (like rent or dividends), its interest is fully taxable in India with TDS deducted, and repatriation is capped at USD 1 million per financial year with CA certification.
Is NRE FD interest taxable in India?
No. Interest earned on an NRE FD is exempt from income tax in India under Section 10(4)(ii) of the Income Tax Act, as long as you remain an NRI under FEMA and Income Tax rules. However, it may still be taxable in your country of residence depending on local tax laws and any applicable DTAA.
Can I repatriate money from an NRO FD?
Yes, but with limits. You can repatriate up to USD 1 million per financial year from an NRO account, including sale proceeds and accumulated income, after submitting Form 15CA and, where required, a Form 15CB certificate from a Chartered Accountant confirming applicable taxes have been paid.
What is an FCNR FD and how is it different from NRE?
An FCNR (Foreign Currency Non-Resident) FD is held in a foreign currency such as USD, GBP or EUR, so it carries zero currency risk since it is never converted to Rupees. An NRE FD, by contrast, is held in Indian Rupees, so its value in your home currency fluctuates with the exchange rate. Both offer tax-free interest and full repatriability.
Can I open an NRI FD jointly with a resident Indian?
An NRE or FCNR FD can only be held jointly with another NRI, or with a resident Indian relative on a "former or survivor" basis under RBI's 2011 rules (the resident cannot operate the account during the NRI's lifetime). An NRO FD can be held jointly with a resident Indian relative more flexibly, since it is meant for India-sourced income.
Which NRI FD has the best interest rate?
NRE and NRO FD rates are generally similar to domestic FD rates at the same bank, since both are Rupee-denominated. FCNR FD rates are usually lower in absolute terms because they track the interest rate environment of the foreign currency (like the US Fed rate for USD deposits), not Indian rates — but you avoid currency conversion risk entirely.
What happens to my FD if I return to India permanently?
Once your residential status changes to resident under FEMA, you must inform your bank. NRE and FCNR accounts are typically converted to a Resident Foreign Currency (RFC) account or a regular resident account, while NRO accounts convert to a regular resident savings/FD account. Existing FDs usually continue until maturity at the original rate before conversion.

🌍 Compare NRE & NRO FD Rates Before You Invest

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Disclaimer: This article is for informational purposes only and does not constitute tax, legal or investment advice. Rules under FEMA, RBI regulations and the Income Tax Act are subject to change and interpretation can vary by individual circumstance and country of residence. Please consult a qualified Chartered Accountant or FEMA specialist before opening an NRI account or repatriating funds. BookmyFD is a comparison platform and does not offer tax or legal advice.

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