Are NRE and NRO Deposits Same or Different?

 NRIs who want to keep their India based earnings in India, usually hold either NRO or NRE accounts. These are fairly popular deposit options exclusively available to them which give them a good rate of return and place their funds in India. In this article, we will look at what NRE Fixed Deposit and NRO Fixed Deposit accounts are and how they are different from each other.


  • NRE Account- NRE is an acronym for the Non-Resident Rupee/External account. An NRE Fixed Deposit Account is where the Indian residing overseas makes deposits from there and sends the same in an Indian account. The money after reaching gets converted into Indian currency (Rupees).

  • NRO Account:- An NRO Savings account is a Non-Resident Ordinary Rupee Account, usually opened by an NRI to manage the income in any form (like rent, pension or other types of dividends) that is earned in India.

How are NRE and NRO accounts similar/different?

1. Tax Exemption

The interests earned from NRO fixed deposits and credit balances are taxable at a rate that is higher than the domestic FD tax rates. Wealth and gift taxes are also applicable to such interests.

The interests earned from NRE fixed deposits are not taxable; hence, they are completely tax-free.

2. Repatriability or Transferability

Individuals with NRO FDs are not allowed to transfer the principal investment; only the interest earned (net of applicable taxes in the financial year) can be transferred to a foreign account.

NRE fixed deposit allow full repatriation of funds including both principal amounts and earned interests to the foreign accounts.

3. Joint accounts

An NRO account can be opened jointly with an NRI as well as an Indian resident. NRE fixed deposits can be opened jointly with another NRI but not with an Indian resident.

4. Deposits and Withdrawals

An NRI can only deposit funds in NRO account if they are originating in India, and ultimately in his/her NRO fixed deposit. Hence, transferring funds from abroad for the same is also not allowed.

However, the transfer of funds from the NRE account to the NRO account for the same is allowed.

Although, you cannot open NRE fixed deposits by transferring currency from an NRO account.

Regardless of the deposition, all withdrawals can only be done in Indian currency.

5. Interest Rates

Although the rates of interest may vary for NRE and NRO FD accounts according to the banks, usually, they are offered with maturity between 1–20 years.

6. Proneness to Exchange Rate Fluctuations

The NRE FD Accounts are prone to the risk of conversion loss and exchange rate fluctuations regarding the value of Rupee against the foreign currency. However, there are no such risks involved with NRO FD accounts.

There is no “better” option when you’re going to choose from these accounts. You can go for an NRE FD or an NRO deposit account as per your need, keeping in mind if you want to park your foreign earnings in an Indian account or park the funds earned from India.

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