Dear Friends,

 

Good wishes.  On  16th December 2011, Reserve Bank of India  has de-regulated interest rates on Non-Resident External (NRE) deposits and Savings accounts resulting in the interest of NRE deposits shooting up to 10% to  from the miniscule offer of 3.5% or so - an additional yield of almost 200% for Non-Resident Indians (NRIs) holding NRE deposits worth app. US$ 27bn.

 

As Investment Advisors, we suggest that a small action of prematuredly encashing the existing NRE deposits placed at lower interest rates in the range of 3.5% at cost of  even paying  penalty interest of 1% or so and placing the same as fresh NRE deposit, will boost interest income by almost 200% - " a small action in time - will multiply your NRE interest to nine ".[ in this case even ten]

 

Similarly, investments placed as Non-Resident Ordinary (NRO) deposits which are liable to income tax and Withholding Tax of 30% should also be prematuredly encashed , balance in NRO account be repatriated and thereafter converted to and placed  as a fresh NRE deposits earning higher and tax free interest.

 

These NRE deposits be placed for a longer term of 5 years to 10 years as the RBI Governor has given clear indications of interest rates sizing down over next 2 years.And ideally the deposits be sliced and placed as multiples, say a INR 10 mn amount be placed as 10 NRE deposits of INR 1 mn each which will facilitate encashment of part of funds if the same are required during the term of deposit.

 

 

You can view the interest rates on NRE deposits of all the banks across India on our website at http://www.nribanks.com/currency.php?id=36 and in case you need any further information or assistance, please inform otherwise  we wish a wonderful and joyous New Year 2012 for you and family.

 

Sincerely.