State Bank of India, country's largest lender, said it has revised rates of interest for the deposits made by NRIs. The State Bank of India (SBI) offers a rate of interest that ranges between 4.25% and 6.25% to the non resident Indians (NRIs) on fixed deposits. The interest rate depends on the time duration for which the money has been deposited.
For a term deposit of two years and less, the rate of interest in case of NRE (non resident external) accounts is 6.25%. As the tenure rises beyond two years and up to 10 years, the interest that accrues is 6%.
The above mentioned rates are applicable when the amount deposited is less than Rs one crore. For over Rs one crore, the rate of interest is constant and stays at 4.25% per annum.
The above rates of interest are effective from November 1, 2017 onwards.
It is noteworthy to mention here that there is a significant difference between the NRE and the NRO accounts. NRE (Non Resident External) accounts are the ones maintained by NRIs in Indian banks and one can deposit money only in the foreign currency. The interest earned on these accounts is tax free.
Whereas the accounts maintained by NRIs for managing their income in India are known as NRO (Non Resident Ordinary) accounts. The interest earned on NRO accounts is taxable.
For a deposit that ranges between 7 days and 45 days, the rate is 5.25%. When the tenure is between 46 days and 2 years, the rate rises to 6.25%. For more than two years, the rate is 6%.
However, in case of fixed deposits to the tune of Rs one crore and above, there are four different rates of interest.
The amount that is between 7 days and 45 days, the rate is 3.75%. It rises to 3.85% when the duration ranges between 46 days and 210 days.
For the duration that ranges between 211 days and one year, the rate rises to 4%. For FDs longer than one year, the rate remains flat at 4.25%. Premature withdrawals are chargeable.
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