Are you an NRI and looking for an apt savings methodology for your Indian earnings? Do you wish to invest money every month and earn interest in the same? Recurring Deposits (RDs) could be the perfect option for you. But since you can’t open a regular recurring deposit, NRO (Non-Resident Ordinary) RDs could be the perfect option for you. Find out more about them in this post.
Many NRIs continue to earn in India through rental income, profit from the sale of assets, dividends from investments etc., even after they have moved out. To manage their earnings in India, NRIs have to open an NRO account. While this is great, NRIs can grow their savings even faster by opening an NRO RD account.
Let’s know more about this in detail.
NRO Recurring Deposit: The Perfect Savings Option for You!
NRO or Non-Resident Ordinary recurring deposits enable you to save a specific amount of money every month and earn a fixed interest rate on the same for a defined tenure.
This type of recurrent deposit is solely meant for those NRIs who wish to maintain and manage their income earned in India. This may include dividends, rent, pensions, etc.
While these work very similar to the fixed deposits, the ease of periodical investment makes it a preferred option for many NRIs.
Top Features and Benefits
- Grow Your Savings Steadily: The biggest benefit of NRO RD is that it accepts money every month in small instalments, in multiples of Rs 1,000. You need not make huge investments.
- Flexible Tenure: The tenure for the recurrent deposit varies widely. You can invest for as little as six months or can even increase the investment period up to 10 years.
- Ease of Funding: The NRO RD facilitates easy transferring of funds from your NRE or NRO savings account.
- Competitive Exchange Risk: You can also reap the benefits of competitive exchange rates when you convert your foreign currency into Indian rupees into your NRE account.
- No Exchange Loss: Since you can fund your RDs from your NRO account held in INR, there is no exchange loss.
- Attractive Interest Rates: The NRI RD interest rates are quite impressive and ranges between 3% to 5.50%.
NRE RD vs NRO RD
While both are essential RDs, there are some subtle differences between the two.
- Funding of RDs: NRE RDs can be invested only through NRE accounts, whereas you can fund your NRO RDs through both NRE and NRO accounts.
- Repatriability of Funds: While NRE RDs allows 100% reparability of funds (both principal and interest), in NRO RDs, the interest is fully repatriable, whereas the principal can be repatriated up to a specific limit each year.
- Exchange Risk: Since NRE RDs can only be funded through NRE accounts, there is a possible exchange risk for funding your RDS. As mentioned before, NRO RDs don’t carry such risks as long as you don’t fund it from your NRE savings account.
Major Documents Required for Account Opening
A few documents you will need to submit are;
- Passport copy
- Visa copy
- Address proof (Indian and/or Overseas)
If you are opening an NRO account from outside India, the documents need to be attested by an Embassy or a Consulate official/ Bank/ Notary apart from being self-attested.
Is not NRO RD an excellent option to save your hard-earned money? With all the attractive features and advantages, NRO RDs have become a popular pick among the NRIs. Thus, plan on your savings, make sure you invest in Non-Resident Ordinary recurring deposits.