PNB cuts NRE FD interest rates by up to 25 bps

In the era of rising interest rates, the Punjab National Bank (PNB) has reduced its non-resident external (NRE) deposit rates by up to 25 basis points (bps) across all tenures for amounts below Rs 2 crore, effective from November 17, 2022. Here is a look at the latest NRE FD rates as per the PNB website.

PNB NRE deposit rates
Punjab National Bank now offers interest rates in the range of 6.30% from 6.55% for deposit NRE deposit tenure of one year to less than 599 days. For a tenure of 666 days, the bank will now offer an interest rate of 7% from earlier 7.25%, a drop of 25 basis points. The bank will offer an interest rate of 6.30% on 601 days to 2 years tenure. Earlier the interest rate for this tenure was 6.55%. For deposit tenure of two years to three years, the bank now offers an interest rate of 6.25% from earlier 6.50%.
For tenure between 3 years to 10 years, the bank now will offer interest rates of 6.10% from 6.25%.

Taxation on NRE
Note that interest income from NRE accounts is exempt under Income-tax rules. Deposits held under NRE account are not liable to wealth tax.

Important FAQs on NRE accounts, deposits
Who can open NRE a/cs?
The a/c can only be opened in the name of NRI individuals – single/joint. - NRE accounts can be opened only by the NRI himself and not through the holder of the power of attorney

Who is Non-resident Indian / Persons of Indian origin?
Those Indian residents, who are in employment, studying and staying permanently abroad and foreign nationals (except of Pakistan and Bangladesh), with their origin in India

NRE accounts can be opened with which funds
According to the PNB FAQs on NRE, “These accounts can be opened in Indian Rupees with / out of the funds received as foreign inward remittances in freely convertible currency through normal banking channel. - The Foreign Currency Travelers Cheques / Notes may be accepted during temporary visits of the NRI, for credit to account.”

How the interest is to be paid on term deposit maturing on Sundays / holidays / Non-business working days?
- Bank to pay interest at the originally contracted rate on the deposit amount for abovementioned days, intervening between the due date and the actual date of payment, on the succeeding working day.

What are the restrictions on advances against NRE deposits?
Can be extended against security of funds held in NRE Account either to the depositors or third parties without any ceiling subject to usual margin requirements.