NRE vs NRO FD: SBI, HDFC Bank, PNB and Axis Bank interest rates compared; know key differences

NRE (Non-Resident External) accounts and NRO (Non-Resident Ordinary) accounts are two prominent investment options for Non-Resident Indians (NRI), Overseas Citizens of India (OCIs) and Persons of Indian Origin (PIO) to invest in India. While they can invest and withdraw in FRE and FRO accounts in Indian rupees, the basic difference is that choice depends where the fund to invest has come from.

Here's a look at how NRE and NRO accounts differ and the interest rates offered by major banks such as State bank of India (SBI), HDFC Bank, Punjab National Bank (PNB) and Axis Bank on their 5 to 10 years NRE and NRO fixed deposits (FDs).

Also read: $17.4 billion flows into FCNR(B) deposits: Which bank offers the best 3-year FCNR(B) FD rate—SBI, PNB, HDFC Bank, ICICI Bank or Canara Bank?

Difference between NRE and NRO account

While in NRO accounts, NRIs can invest their earnings from Indian sources, in NRE accounts, they can park their earnings from international sources.

While interest on NRO accounts is subject to Tax Deducted at Source (TDS), interest earned from NRE accounts is tax-free.

While NRO funds can be repatriated up to USD $1 million per year after taxes, NRE account funds are fully repatriable.

While NRE FDs typically have a minimum tenure of one year and a maximum tenure of 10 years, NRO deposits have a minimum tenure of 7 days.

NRE vs NRO FD interest rates

Most banks offer the same interest rates on similar tenures of NRE and NRO FDs. Here are the interest rates offered by leading banks such as SBI, PNB, HDFC Bank and Axis Bank on their 5-10 year NRE and NRO FDs. These rates are for deposits below Rs 3 crore.

SBI offers an interest rate of 6.05% apiece on NRE and NRO fixed deposits with tenures of 5 years to 10 years.
PNB offers an interest rate of 6% each on NRE and NRO fixed deposits with tenures of 5 years to 10 years.
HDFC Bank offers an interest rate of 6.15% apiece on NRE and NRO fixed deposits with tenures of 5 years 1 day to 10 years.
Axis Bank offers an interest rate of 6.50% each on NRE and NRO fixed deposits with tenures of 5 years to 10 years for deposits below Rs 3 crore.

NRE vs NRO accounts: Key differences

Feature	NRE (Non-Resident External) Account	NRO (Non-Resident Ordinary) Account
Purpose	Used to park income earned outside India in Indian rupees	Used to manage income earned in India, such as rent, pension, dividends or interest
Source of funds	Foreign earnings remitted from abroad	Income earned in India or funds transferred from abroad
Currency	Maintained in Indian Rupees (INR)	Maintained in Indian Rupees (INR)
Tax on interest	Interest earned is tax-free in India (subject to applicable conditions)	Interest earned is taxable in India and is subject to TDS
Repatriation	Both principal and interest are fully repatriable without any limit	Funds are repatriable up to USD 1 million per financial year, subject to payment of applicable taxes and RBI guidelines
Primary use	Ideal for maintaining overseas earnings and liquidity in India	Suitable for managing income generated from Indian sources

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