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Here's a simple guide to help you understand how they work.
Types of NRI fixed deposits in India
A fixed deposit (FD) is a secure way to invest your money. You deposit a lump sum for a fixed period (7 days to 5 years with HSBC) at a set interest rate. When the term ends, you get your initial deposit plus the interest earned.
FDs are great for risk-averse investors because market changes won’t affect your returns.
As an NRI or overseas citizen of India (OCI), your FD options depend on whether you're investing foreign income or Indian earnings. Another key factor to consider is the ability to repatriate funds.
Learn more: Investment options for NRIs in India
Applying is simple. If you have an existing NRO or NRE account, you can open a fixed deposit online through your bank's app or website. With HSBC, you may be able to open an account in just 4 hours.
If you're a new customer with HSBC and 18 or older, you'll need to provide the following documents to open an NRO or NRE account:
Interest rates on NRI fixed deposits are typically higher than those offered on savings accounts.
First, the duration of the deposit plays a key role – longer tenures often come with higher interest rates, allowing you to choose a term that fits your needs.
Second, the deposit amount matters, as larger deposits typically earn better rates since they provide banks with greater cash flow.
Lastly, bank policies also impact the rates, which are shaped by internal strategies, market conditions, liquidity, and financial goals.
Interest earned on NRO fixed deposits is taxable in India. Banks deduct 30% as Tax Deducted at Source (TDS), plus surcharge and cess. However, interest on NRE and FCNR fixed deposits is tax-free (in India), with no TDS, as long as you remain a non-resident.
Fixed deposits are a reliable way to build your wealth, but it's important to weigh their benefits against their limitations.
| Benefits | Drawbacks |
|---|---|
| Guaranteed returns: Fixed deposits offer a secure way to grow your money with a guaranteed interest rate. | Lower returns: Returns may be lower than market-linked investments like equities or mutual funds.
|
| Higher interest rates: Earn more on your savings compared to a standard savings account. | Low liquidity: Your money is locked in for a fixed term, so accessing it early can be difficult. |
| Flexible options: You can choose the amount, tenure, and type. |
Penalties for early withdrawal: If you withdraw your fixed deposit early, your interest may be reduced, and penalties could apply. |
| Benefits | Guaranteed returns: Fixed deposits offer a secure way to grow your money with a guaranteed interest rate. | Guaranteed returns: Fixed deposits offer a secure way to grow your money with a guaranteed interest rate. |
|---|---|---|
| Drawbacks |
Lower returns: Returns may be lower than market-linked investments like equities or mutual funds.
|
Lower returns: Returns may be lower than market-linked investments like equities or mutual funds.
|
| Benefits | Higher interest rates: Earn more on your savings compared to a standard savings account. | Higher interest rates: Earn more on your savings compared to a standard savings account. |
| Drawbacks | Low liquidity: Your money is locked in for a fixed term, so accessing it early can be difficult. | Low liquidity: Your money is locked in for a fixed term, so accessing it early can be difficult. |
| Benefits |
Flexible options: You can choose the amount, tenure, and type. |
Flexible options: You can choose the amount, tenure, and type. |
| Drawbacks | Penalties for early withdrawal: If you withdraw your fixed deposit early, your interest may be reduced, and penalties could apply. | Penalties for early withdrawal: If you withdraw your fixed deposit early, your interest may be reduced, and penalties could apply. |
Bank deposits up to INR500,000 per depositor are fully insured by the Deposit Insurance and Credit Guarantee Corporation (DICGC) under the Deposit Insurance Scheme.
Opening a fixed deposit with HSBC is easy! Start with just INR25,000 for an NRE or NRO account. Additional eligibility criteria may apply.
Can NRIs withdraw FDs early?
Yes, but there’s a 1% penalty on the applicable interest rate. No interest is paid if withdrawn before the minimum tenure.
Is NRI FD interest taxable?
Interest on NRE and FCNR deposits is tax-free. NRO deposit interest is taxed at 30%.
Is an NRE or NRO account required?
Yes, it's mandatory for NRI fixed deposits.
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