Most NRI guidance on where to park money in India is either blog content written to drive bank affiliate clicks or advice from your uncle, who has had the same FD at the same branch since 1997. Neither tells you the real spread between banks, or where each account type (NRE, NRO, FCNR, RFC) wins.
In mid-May 2026 we pulled 1-year rates from eight banks that actively compete for NRI deposits. They are the largest PSU (government-owned) and private banks (SBI, HDFC, ICICI, Axis, Kotak), one additional private bank (IDFC), a foreign bank with a meaningful NRI presence (DBS), and a mid-sized PSU (Union Bank of India). The comparison below shows all four account types side by side.
The 8-bank comparison
| Bank | NRO | NRE | FCNR | RFC |
|---|---|---|---|---|
| SBI | 6.25% | 6.25% | 4.40% | 4.40% |
| HDFC | 6.25% | 6.25% | 3.65% | 3.65% |
| ICICI | 6.25% | 6.25% | 3.85% | 3.85% |
| Axis | 6.25% | 6.25% | 4.00% | 4.00% |
| Kotak | 6.50% | 6.50% | 4.40% | 4.40% |
| IDFC | 6.50% | 6.50% | 4.50% | 4.50% |
| DBS | 6.35% | 6.35% | 3.75% | 3.75% |
| Union Bank of India | 6.25% | 6.25% | 5.00% | 5.00% |
1-year, 1-day+ tenor. Deposits under ₹3 crore. NRE/NRO are INR-denominated, and FCNR/RFC are USD-denominated. Rates as of May 15, 2026.
The table shows three things before we go through each account type.
First, the NRE and NRO rate spreads are narrow, and identical. Both NRE and NRO range from 6.25% to 6.50%, a gap of 25 bps at the top end. A bp is a basis point, and 100 bps is one percentage point. On a ₹50 lakh deposit, that 25 bps is roughly ₹12,500 per year. It is worth picking the better bank, but the choice will not change a retirement plan.
Second, the FCNR spread is wide. Rates run from 3.65% (HDFC) to 5.00% (Union Bank of India), a 135 bps gap, the widest of any column. On a $100,000 deposit, that is $1,350 per year in foregone interest, every year for the life of the deposit. RFC tracks FCNR almost exactly.
Third, the bank with the best FCNR rate is not the bank most NRIs would default to. HDFC, ICICI, and SBI are the names US-based NRIs reach for first, and on FCNR they sit in the bottom half of the table. Union Bank of India and IDFC pay materially more for the same product.
NRE fixed deposits: the default rupee account
NRE FDs are the default for most US-based NRIs. Interest is tax-free in India. Principal and interest are fully repatriable (you can move them back to the US). The rupee yields are 3 to 4 times what you would earn on a US savings account in nominal terms.
The catch is currency, and it is a big one. An NRE FD pays you in rupees, and the rupee has depreciated 12.13% in the 12 months to mid-May 2026. A 7% NRE rate against a 3.5% structural currency drag is a 3.5% real USD return, before US taxes on that interest. The longer history of that drag is in our piece on the rupee's slide.
In the table, Kotak and IDFC tie for the 1-year NRE lead at 6.50%. Five banks (SBI, HDFC, ICICI, Axis, Union Bank of India) are at the bottom at 6.25%. DBS sits between, at 6.35%. The 25 bps spread between top and bottom is worth roughly ₹12,500 per year on a ₹50 lakh deposit. Brand and service quality should weigh as heavily as rate in the decision.
Playbook Move: NRE FDs are a good fit when you already have rupee income (rent, dividends, or family transfers) that would otherwise sit in a savings account. They also fit when you are deliberately building a long-term rupee allocation for retirement that spans both countries. They are not a good fit when you are converting dollars to fund them. The currency depreciation typically offsets the higher interest rate, and FCNR is a better choice in that situation.
NRO fixed deposits: the mandatory account, not the best one
NRO is where your Indian-source income has to live. That includes rent from that Bangalore flat, dividends from Indian stocks and your father's gift that landed in your old SBI account. The account is not optional. How much you let accumulate there is.
NRO rates are tightly clustered. Five of the eight banks pay 6.25%, and three pay 6.35% to 6.50%. The 25 bps spread is the narrowest in our table. NRO is a mandatory account for any NRI with Indian-source income, so banks have little incentive to compete aggressively on rate.
The nominal rates look similar to NRE, but the economics differ. NRO interest is taxed at 30% TDS (tax deducted at source, withheld by the bank) in India. The rate is 30%, not 10%. The principal is only repatriable up to USD 1 million per financial year, subject to documentation.
You then pay US tax on the same interest, with a Foreign Tax Credit (FTC) claim to avoid double taxation. The paperwork that lowers the 30% is covered in NRE vs NRO interest, TDS and the DTAA.
After the TDS is withheld, a 6.25% nominal NRO rate becomes a 4.4% post-tax rate in India. It then gets reported on your US 1040 as ordinary income, with FTC offsetting the 30% you already paid. The arithmetic ends up roughly comparable to a US taxable bond fund, with worse liquidity and more paperwork.
Compliance Guardrail: If your NRO balance plus every other foreign account aggregate over $10,000 at any point in the year, FBAR (the US foreign bank account report) applies. We covered this in the $10,000 FBAR threshold. Most NRIs with NRO accounts are over threshold and don't realize it.
Playbook Move: Keep NRO balances as low as your situation allows. Transfer excess balances to NRE (after completing the bank's required documentation for an NRO-to-NRE transfer), or convert them to dollars and remit to your US account. NRO is the account where Indian-source income has to land. It is not a place to accumulate savings.
FCNR and RFC: the two dollar columns
The two right-hand columns of the table are deposits held in dollars at an Indian bank, so the rupee's moves do not touch them. FCNR is where the 135 bps gap between banks sits, and it has its own rules on tenor, tax and how interest is calculated. Those are in FCNR (USD) deposit rates and how the interest works.
RFC pays the same rates as FCNR at every bank in the survey. It is the account for the period after you move back to India.
The summary table
| Account | Currency | Rupee risk | India tax | Repatriation |
|---|---|---|---|---|
| NRE FD | INR | Yes (full) | None | Full |
| NRO FD | INR | Yes (full) | 30% TDS | Capped @ $1M/yr |
| FCNR | USD | None | None | Full |
| RFC | USD/GBP/EUR | None | None when NRI | Full |
If you are sending dollars to India, start with FCNR for dollars you want to leave in dollars, and NRE for dollars you intend to convert into rupee-denominated assets. NRO is required for any Indian-source income you receive. RFC is for the period after you return to India, and is easier to set up before you need it.
Reading the table for your own money
The survey gives three checks to run before you open or renew a deposit:
- Start with the currency the money is in. Rupee income that is already in India goes to NRE or NRO. Dollars you want to keep as dollars go to FCNR.
- Then look at the spread for that column. On NRE and NRO the gap between the best and worst bank is 25 bps, so service can decide it. On FCNR the gap is 135 bps, so the bank you pick changes the result.
- Then check tax and repatriation. NRO is the only one of the four with 30% TDS and a cap on how much you can take out each year. That is why its balance should stay low.
From Edition 3 of the NRI Playbook newsletter. For informational purposes only; not financial, tax, or legal advice. For decisions about your specific situation, consult a qualified cross-border tax professional.