NRI Fixed Deposit in UAE

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Living and working in the UAE is an unmatched experience. From tax-free income to tax-free investment returns, world-class living conditions, some of the most-liked tourist places, and impeccable healthcare, there is so much to look forward to when you move to the UAE. The benefits are even greater when you are an Indian citizen, relocating to the UAE. Non-resident Indians now have the facility to open some special NRI bank accounts. One of these accounts is the NRI fixed deposit account. These accounts are perfect to further build on your savings and keep your active earnings appropriately managed in India. Let’s dive in to know more about the features and benefits of these accounts:

What are NRI Fixed Deposit Accounts?

NRIs or non-resident Indians can open fixed deposit and savings accounts in India and manage them from a different country. These special accounts are known as NRI fixed deposit accounts or savings accounts, depending on which type you choose. NRI fixed deposit accounts are just like any other fixed deposit account that you open in the UAE. The difference is that NRI fixed deposit accounts are opened in your country of origin, which is India in this case. There are three types of NRI fixed deposit accounts available for all People of Indian Origin with their present domicile in a different country. Two of these three accounts can be opened in Indian currencies while one can be opened in any currency allowed by the Reserve Bank of India.

Who Needs NRI Fixed Deposit Accounts?

Anyone who holds the status of Non-Resident Indian can open an NRI fixed deposit account. Since you can either be a resident or a non-resident of India, you can operate either NRI accounts or resident Indian accounts. Following people can consider opening an NRI fixed deposit account:

  • If you are a Non-Resident Indian and have been living in a foreign country for a long time now. NRI fixed deposit accounts are suitable for you if you have earned substantially in a foreign currency like Dirham, Dollar, Euros, etc. 
  • If you are an NRI but have a source of income in India. This can include income from rent received from properties you own in India. 
  • If you are staying outside of India for business or employment purposes. 
  • If you have been employed in a Government of India undertaking like embassies. 
  • If you are a Person of Indian origin or an Overseas Citizen of India.

Naturally, NRI fixed deposit accounts are a form of long or short-term investment. So, if you are still in your early days of earning and building wealth, you can opt for an NRI savings account. Once you have accumulated significant wealth to cover the minimum set fund requirements by banks for NRI fixed deposits, you can move your money to fixed deposits. Given the lock-in period that comes with NRI fixed deposit accounts, or any generic fixed deposit, you will earn higher interest rates on your savings.

Types of NRI Fixed Deposit Accounts

There are three basic types of fixed deposits for NRIs in India – NRE fixed deposit (Non-Resident External account), NRO fixed deposit (Non-Resident Ordinary Account) and FCNR fixed deposit account (Foreign Currency Non-Resident Account). All these accounts deal with your income as a non-resident of India but with a few twists and advantages of their own. Given below is a complete run-down of all three:

NRE Accounts

Non-resident External or NRE fixed deposit accounts are the NRI fixed deposits that can be opened in foreign currency. However, as soon as you deposit your money, the bank converts it into INR. This means you can save your foreign-earned income in India in foreign currency but the banks keep it in INR. NRE fixed deposit accounts are exempt from income tax in India since the earnings stored in these accounts are not earned in India. They have opened in the name of an NRI only and not a resident Indian. Both the interest earned and the principal amount saved in an NRE fixed deposit can be repatriated to other NRE accounts completely. While transfers can be done to both NRE and NRO fixed deposits in any approved foreign currency, withdrawals made from NRE accounts can only be in INR. The currency fluctuation rate applies when you repatriate money from NRE fixed deposits since withdrawals are to be made in INR. 

Who Should Open NRE Account?

NRE fixed deposits do come with a few restrictions. For example, you can only withdraw money in Indian National Rupee only. These accounts are also subject to currency conversion rates since the money earned in a foreign currency has to be converted in INR for submission. So, it is best to open an NRE account if you want the complete freedom to repatriate your funds anywhere you like, whether other NRE accounts or NRO accounts and do not plan to withdraw. You will also save the 30% income tax that is applicable on the NRE fixed deposit counterpart.

NRO Accounts

Non-resident Ordinary or NRO fixed deposits are the second type of NRO fixed deposit accounts. These accounts can be opened in INR like NRE fixed deposits. However, NRO fixed deposits are used to save your earnings in India when you are a resident of another country, like UAE. This can include returns from investments, rent from leased properties in India, etc. Withdrawals can only be made in Indian National Rupee. NRO fixed deposits can also be opened as joint accounts with resident Indians. The stored funds in these NRI fixed deposits can be transferred to other NRO fixed deposit accounts only and not NRE accounts. NRO fixed deposit funds are subject to income tax. Repatriation is also restricted with NRO fixed deposits. Most banks do let you repatriate more than USD 1 million at a time from an NRO account.

Who Should Open NRO Account?

You can think of opening an NRO fixed deposit account if you have dependents in India, plan to move back there or have actively incoming earnings. NRO Fixed deposits offer you a bit restricted liquidity as compared to NRE fixed deposits since there is a limit of a maximum repatriated sum. Additionally, they can be opened as joint accounts with Indian residents. If you would like an Indian resident to have equal access to your earnings while you maintain your NRI status, NRO fixed deposits are an ideal choice for you. 

FCNR Accounts

Foreign Currency Non-Resident fixed deposit accounts is probably the most lucrative option for NRIs living and earning outside of India in your country of residence. FCNR accounts allow you to open your account in any currency that RBI has sanctioned. These currencies include USD, AUD, SGD, CHF, CAD, EUR, GBP, HKD, and JPY. Unlike NRO and NRE accounts, FCNR accounts are only available as fixed deposit accounts. NRE and NRO accounts can also be opened as savings accounts. You are also allowed to transfer money from your NRE account to your FCNR account while opening it. 

The rate of interest applicable on FCNR accounts are subject to the tenure you choose for fixed deposit and the currency. However, FCNR account interest rates are fixed. If your residency status changes to India during the tenure of this NRI fixed deposit, you can still hold the account till maturity. This NRI fixed deposit is completely tax-free since the funds are deposited in foreign currencies. The available tenure ranges from 1 to 5 years.

Who Should Open FCNR Account?

FCNR accounts are a perfect choice if you only intend to keep the money saved in its original currency too. Withdrawals can be made in foreign currency as well and this means you will not face any risk related to currency fluctuation. FCNR accounts are the perfect choice to earn good interest on your savings without paying any tax for the earned interest. Additionally, you can also apply for a loan in India and get it sanctioned with FNCR account funds as collateral.


NRE vs NRO vs FCNR NRI Fixed Deposit Accounts - Overview

Parameters NRO Fixed Deposit NRE Fixed Deposit FCNR Fixed Deposit 
Purpose To deposit income earned in India by NRIs To deposit income earned outside of India by NRIs To deposit income earned outside of India by NRIs
Deposit Currency Indian National Rupee Foreign Currency Foreign Currency
Withdrawal Currency  Indian National Rupee Indian National Rupee Foreign Currency
Taxation Slab Income tax will apply in India No taxes applicable No taxes applicable
Risk Associated No currency fluctuation risk Currency fluctuation risk applicable No currency fluctuation risk
Reparability Allowed to repatriate funds to other NRO accounts only. Partial repatriation allowed. Allowed to repatriate funds to other NRE and NRO accounts. Full repatriation allowed. Allowed to repatriate fully.
Loan Availability Can take loans in India in INR Can take loans in India in INR Can take loans in India in foreign currencies
Joint Account with Indians Allowed Not Allowed Not Allowed
Joint Account with NRI Allowed Allowed Allowed

Benefits of Having an NRI Fixed Deposit Account

Investment in India

Having an NRI fixed deposit in India will allow you the freedom to freely invest in India. NRI fixed deposit accounts like NRE fixed deposits accounts can be used to facilitate your investment portfolio in India since you will need funds in INR to purchase equity, shares and invest in various ventures.

Repatriation of Income in India

The income you earn while living and working in a foreign country can be repatriated to your relatives and dependents in India. NRE fixed deposits and FNCR fixed deposits can be used for this purpose. If you want your family to have a regular stream of income, you can also go with an NRI savings account. 

Facilitate Continuity of Earnings

Living outside India as an NRI does not mean that your income in India has to come to a halt. Your NRI fixed deposits and savings accounts can be used to save whatever you earn in India and then earn additional interest on it. 

Saves You from Exchange Rate Fluctuation 

Currency exchange rate fluctuations are one of the many things that can end up costing you a lot when you transfer money from your foreign account to a resident account in India. NRI fixed deposit accounts like NRE and FCNR accounts can be opened in the foreign currency itself. This means you can save substantially by avoiding currency fluctuation rates. 

High-Interest Rates

NRI fixed deposits in India earn a significant interest. Fixed deposits for NRIs generally get rather attractive rates of interest, much higher than many other countries around the world. So, if you are a UAE resident and earning regularly in currencies like dollar and euro, savings your money in an NRI fixed deposit may reward you with further interest earned. 

Tax Saving

The taxation rules related to income do apply to NRO accounts, NRE accounts and FCNR fixed deposits and are completely free of any income tax. This means all your income earned in the UAE but saved in India will not get taxed. Income tax is not applicable in the UAE either. But FCNR accounts and NRE fixed deposits are tax-free. Hence, these accounts are the only way to save foreign income in India or repatriate it for your dependents in India to use without paying tax. 

Loan Facility in India

Generally, only Indian residents can get loans from banks functioning in India. However, if you have an NRI fixed deposit account or savings account in India, you can get loans in India by keeping the money saved in NRI accounts as collateral.

Documents Required to Open NRI Fixed Deposit Accounts

  • A copy of valid Indian passport with all the basic details clearly visible. 
  • Resident visa for the country of NRI’s residence
  • Document proofs to confirm address in India as well as oversees
  • PAN card of the NRI or Form 60 if PAN card is not available
  • Passport-sized photographs
  • Proof of NRI status via the resident visa, employer-provided document or student visa
  • Initial payment cheque from the current bank account NRI holds
  • Attested photocopies of all the documents from an authorized Notary in the UAE and Indian embassy

NRI Fixed Deposit FAQs

Q1. Can I hold more than one fixed deposit account as an NRI?

Ans: Yes, you can have more than one NRO fixed deposit account as an NRI. You can do so by using the multi-deposit facility available for NRIs. It allows you to maintain different fixed deposits with different sums and tenures. 

Q2. Can I open a joint NRI account with a resident Indian?

Ans: Only NRO fixed deposits can be opened as joint accounts with resident Indians out of all available NRI fixed deposit accounts.

Q3. Are funds saved in NRI accounts transferable?

Ans: Yes, you can repatriate funds in your fixed deposit for NRIs but the flexibility of transfer depends on the type of NRI fixed deposit account you have. NRE fixed deposits and FCNR accounts allow full reparability while NRO accounts only offer partial reparability.

Q4. Can I use foreign currency to open my NRI fixed deposit?

Ans: Yes, you can use foreign currency to open your fixed deposit for NRIs. Foreign currencies can be used to open NRE and FCNR accounts. 

Q5. Can I withdraw money in other currencies (apart from INR) from NRI fixed deposits?

Ans: Yes, funds in the FCNR account can be withdrawn in foreign currency. Other NRI fixed deposits do not allow it though.

Q6. What are fixed deposit rates for NRI fixed deposit accounts?

Ans: The NRI fixed deposit interest rate for different fixed deposit accounts vary as per the financial institution or the bank. 

Q7. Which NRI fixed deposit can be opened with another NRI?

Ans: FCNR deposits and NRE fixed deposits can be opened as joint accounts with other NRIs.

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