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What is the Procedure to Convert NRO FDs to NRE FDs?

If you're an NRI, an NRE or NRO account is the most efficient way of managing your funds in India. Financial convenience is just one of many things you can experience with your NRI bank accounts. As an NRI, you can open NRO or NRE fixed deposits to invest your funds for higher returns.

However, there may be a situation where you want to convert your NRO FD to an NRE fixed deposit for various reasons. So how do you make this transfer? And are there any hidden implications to it?

As per RBI guidelines, you cannot convert your NRO FDs to NRE FDs. Let's get into details in this blog.

NRI Fixed Deposit Accounts

Both NRO and NRE fixed deposits come with a range of exciting features and benefits where you can safely invest your funds for a pre-determined period.

● NRE Fixed Deposits

For NRIs looking to invest their foreign currency savings in India and earn tax-free interest, an NRE fixed deposit is an ideal choice. Featuring attractive interest rates, flexible tenure, and a nomination facility, you can grow your funds securely.

Moreover, both the principal and interest amounts on NRE fixed deposits are tax-free in India, along with being fully and freely repatriable. Thus, giving you the maximum flexibility in how you manage your funds.

● NRO Fixed Deposits

On the other hand, NRO fixed deposit is ideal for an NRI with a regular source of income in India looking to invest said income for higher returns. You can even open an FD jointly with another non-resident or resident Indian citizen.

What's more, you can earn substantial returns on your rupee income. And while the entire principal amount isn't repatriable, you can still transfer the interest amount earned to a foreign currency. However, this interest income on NRO FDs is taxable under the IT Act 1961.

How to Convert NRO FDs to NRE FDs?

As an NRI, you might want to convert your NRO FD to NRE fixed deposit to earn tax-free interest or enjoy the free reparability feature. However, you cannot do that directly.

You must first close the NRO fixed deposit and transfer these funds from your NRO savings account to the NRE savings account. For this, you'll need to submit the following documents-

  • A signed cheque to transfer the funds
  • FEMA declaration
  • Proof of the source of funds
  • Form 15CA
  • Form 15 CB

Once you transfer the amount to your NRE savings account, you can book your NRE fixed deposit with your bank and earn returns.

In Conclusion

Whether you open an NRE FD or an NRO FD account, you can keep your funds safe from market fluctuations and earn substantial returns on the investment. To open a fixed deposit online or transfer your NRO FD, visit your bank's website to get started.


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