Several banks have raised interest rates on NRO deposits with tenor of five years after three consecutive repo rate hikes by the Reserve Bank of India (RBI). The cumulative rate hike is 140 basis points (one basis point is one-hundredth of a percentage point) between May and August to curb rising inflation. Small finance banks lead with the highest interest rates followed by a foreign bank and small private banks. The public sector banks are not competitive in increasing interest rates like other banks. The average interest rates of top 10 banks is 7.07 percent for fixed deposits (FDs) with five year tenor, according to data compiled by BankBazaar.
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Non-Resident Indians (NRIs) maintain Non-Resident Ordinary (NRO) bank accounts. It is an account meant for an NRI to manage her income earned in India, which includes rentals, dividend incomes, salaries, etc. An NRI can deposit money in foreign as well as Indian currency and make withdrawals in Indian currency from this account. Surplus funds in the NRO savings account should get invested in NRO fixed deposits. Here are the private banks offering interest up to 7.7 percent on NRO deposits with five year tenor.
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Ujjivan Small Finance Bank offers an interest of 7.70 percent per annum on five-year fixed deposits (FDs). Among small finance banks, this one offers the highest interest rate. A sum of Rs 1 lakh invested in this FD will grow to Rs 1.46 lakh in five years.
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Suryoday Small Finance Bank offers an interest rate of 7.49 percent per annum on five-year fixed deposits (FDs). A sum of Rs 1 lakh invested in this FD will grow to Rs 1.45 lakh in five years.
Equitas Small Finance Bank offers an interest rate of 7.25 percent per annum on five-year fixed deposits (FDs). A sum of Rs 1 lakh invested in this FD will grow to Rs 1.43 lakh in five years.
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Deutsche Bank is offering the best interest rates among foreign banks. It offers an interest rate of seven percent per annum on five-year fixed deposits (FDs). Among private banks, Bandhan Bank and RBL Bank are offering the best interest rates. They also offer an interest of seven percent per annum on five-year FDs. A sum of Rs 1 lakh invested in these FDs will grow to Rs 1.41 lakh in five years.
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IDFC First Bank and AU Small Finance Bank offer an interest rate of 6.9 percent per annum on five-year fixed deposits (FDs). A sum of Rs 1 lakh invested in these FDs will grow to Rs 1.41 lakh in five years.
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Small finance banks and smaller private banks are offering higher interest rates to garner newer deposits. The Deposit Insurance and Credit Guarantee Corporation, a subsidiary of the central bank, guarantees investments in fixed deposits of up to Rs 5 lakh.
The data on fixed deposits is as of September 12 as mentioned on websites of lenders. Interest rates on NRO deposits of up to Rs 2 crore for 5 year tenures for all listed (BSE) private banks have been considered for data compilation. Banks for which verifiable data is not available have not been considered. For all fixed deposits, quarterly compounding is assumed.
Hiral Thanawala is a personal finance journalist with 9 years of reporting experience. Based in Mumbai, he covers financial planning, banking and fintech segments from personal finance team for Moneycontrol.
