Yes, NRIs can open a recurring deposit in India, but only in an NRE or NRO account. An NRE RD is funded from money earned abroad, runs for at least a year, and its interest is tax-free in India while you are a non-resident. An NRO RD is for Indian income such as rent or a pension, and its interest is taxed, with banks deducting 31.2% before surcharge. There is no FCNR(B) recurring deposit: RBI rules allow FCNR(B) only as a fixed deposit.
This guide covers the RD itself: which type to pick, what SBI, HDFC Bank and ICICI Bank pay as of 24 October 2026, a 3-year worked example, and what happens to the RD when you move back. For the accounts underneath it (joint holding, transfers, FCNR), read our NRE vs NRO account guide.
NRE RD or NRO RD: which should you open?
The money decides, not you. RBI's Master Direction on Deposits and Accounts lets both NRE and NRO accounts be held as "savings, current, recurring or fixed deposit". What you can pay in is fixed by the account type.
- Open an NRE RD if the monthly instalment comes from your foreign salary or savings. The instalments are debited automatically from your NRE account, which holds money remitted from abroad. The interest is exempt in India and the whole maturity amount can go back abroad.
- Open an NRO RD if you want to save Indian income every month: rent from a flat, dividends, a pension. That money can't go into NRE, so the RD has to be NRO. Its interest is taxable in India.
- FCNR(B) is not an option for monthly saving. The Master Direction says FCNR(B) accounts "can be maintained only in the form of fixed deposit", and RBI's interest-rate directions add that no recurring deposits are accepted under the scheme.
If your foreign savings come in every month and you have no Indian income, an NRE RD is the natural choice. Many NRIs end up with both: an NRE RD for remittances and an NRO RD that soaks up rent.
NRE RD vs NRO RD at a glance
| NRE RD | NRO RD | |
|---|---|---|
| Currency | Indian rupee | Indian rupee |
| Funded from | Money remitted from abroad, or transfers from NRE/FCNR(B) | Indian income (rent, dividends, pension), plus remittances from abroad |
| Minimum tenure | 1 year (RBI minimum for NRE term deposits) | Set by the bank: 12 months at SBI and ICICI Bank. RBI's floor for NRO term deposits is 7 days |
| Maximum tenure | 10 years at SBI, HDFC Bank and ICICI Bank | 10 years at the same banks |
| Repatriation | Principal and interest fully repatriable | Current income can be remitted. Beyond that, up to US$1 million per financial year from NRO balances, with documents and tax paid, under RBI's Remittance of Assets rules |
| Indian tax on interest | Exempt while you are a "person resident outside India" under FEMA: Schedule IV (Sl. No. 1) of the Income-tax Act, 2025, which was section 10(4)(ii) of the 1961 Act | Taxable at your slab rate |
| TDS | None | 30% plus surcharge and 4% cess under section 393(2), Table Sl. No. 17 of the 2025 Act (formerly section 195) |
| DTAA relief | Nothing to relieve in India; your country of residence may still tax the interest | The bank deducts at the treaty rate if it is lower and you give it the documents it asks for. Excess TDS can be claimed back in an Indian return |
| Senior citizen extra rate | Not available to NRIs at HDFC Bank, whose rate card says senior citizen rates "do not apply to NRIs" | Same |
What do banks pay on NRI recurring deposits?
All three banks below pay NRE and NRO RDs the same rate for the same tenure. HDFC Bank's RD table is headed "Resident / NRO / NRE Customers". SBI links its NRE and NRO "TDR / STDR / RD" rates to its NRI term deposit card.
| Bank (deposits under ₹3 crore) | 1 year | 2 years | 3 years | 5 years | Rate card dated |
|---|---|---|---|---|---|
| SBI (NRE and NRO deposits, including RD) | 6.25% | 6.40% | 6.30% | 6.05% | w.e.f. 15 August 2026 |
| HDFC Bank (RD, resident/NRO/NRE) | 6.25% | 6.45% | 6.45% | 6.40% | tenures revised between June 2025 and 19 August 2026 |
| ICICI Bank (NRI RD) | 6.25% | 6.30% | 6.55% | 6.60% | w.e.f. 23 October 2026 |
For SBI, the 2-year figure is its "2 years to less than 3 years" band, the 3-year figure is "3 years to less than 5 years" and the 5-year figure is "5 to 10 years". ICICI's 5-year figure is its "above 3 years up to 5 years" band. All rates were read from each bank's own page on 24 October 2026.
Two things to know about these numbers. First, the RBI raised the repo rate from 5.25% to 5.50% on 7 October 2026. ICICI Bank's card was revised after that. SBI's and HDFC Bank's cards still date from August, so they may move up. Check the bank's page on the day you book, because the rate is fixed for the whole RD from that day. Second, I've left Axis Bank out. Its NRI RD rate sheet is dated 10 September 2024, and its current RD page doesn't say whether it applies to NRE and NRO customers.
Worked example: ₹10,000 a month for 3 years, NRE vs NRO
Illustrative only. The rate is 6.50% a year, a round figure between the 3-year rates above, compounded quarterly. That is the standard bank RD method, and it is the same maths as FinPlann's FD and RD calculator. Each instalment is paid at the start of the month. NRO tax is 30% TDS plus 4% cess (31.2%), with no surcharge. For simplicity, tax is assumed not to reduce the compounding.
| NRE RD | NRO RD | |
|---|---|---|
| You pay in (36 × ₹10,000) | ₹3,60,000 | ₹3,60,000 |
| Maturity value before tax | ₹3,98,244 | ₹3,98,244 |
| Interest earned | ₹38,244 | ₹38,244 |
| Indian tax on interest | ₹0 | ₹11,932 |
| Money in hand | ₹3,98,244 | ₹3,86,312 |
| Works out to (RD rate after tax) | 6.50% | about 4.55% |
Same bank, same rate, same instalments, and the NRO RD leaves you about ₹12,000 poorer. That's nearly a third of the interest.
The gap narrows in two cases. If your country's tax treaty with India has a lower rate on interest and you give the bank the documents it asks for, it deducts less. And if your total Indian income is low, NRO interest is taxed at slab rates, so filing a return can get some TDS refunded. It also works the other way round: your country of residence may tax NRE interest, so "tax-free" means tax-free in India only.
What happens to your RD when you return to India?
This is the part most banks explain badly. RBI's Master Direction on Deposits and Accounts sets out the rules, and they differ by account.
NRE RD
Paragraph 4.9 says NRE accounts "should be designated as resident accounts" immediately on your return for employment or on a change in residential status, or the money can be moved to a Resident Foreign Currency (RFC) account if you choose. The Direction sets the rule, not the mechanics, so ask your bank how it redesignates an RD that is still running.
The tax-free status ends with the change in FEMA status. Schedule IV of the Income-tax Act, 2025 exempts NRE interest only for an individual who is "a resident outside India as defined in section 2(w)" of FEMA. Once you are back for good, the interest that accrues from then on is taxable, even if you are RNOR for income tax. RNOR status helps with foreign income, and NRE interest is Indian income. Our RNOR guide explains what the window does cover.
NRO RD
Paragraph 6.10 says NRO accounts "may be designated as resident accounts" when you return to stay. Your NRO RD carries on as a resident RD. The interest was taxable already, so the change is in the TDS: resident rules apply, under section 393(1), where banks deduct only once interest crosses ₹50,000 in a year (₹1,00,000 for senior citizens).
Closing early
If you break an NRE RD before it has run 12 months, you get your instalments back but no interest. HDFC Bank's card says "No Interest will be paid" on NRE RDs closed within a year, and SBI's NRE card says the same for deposits that run less than a year. After a year, banks pay the rate for the period the RD actually ran, minus a penalty (ICICI Bank charges 1% for RDs closed between one and five years). RBI's 2025 interest-rate directions also say a bank can't charge a premature-withdrawal penalty when you break an NRE term deposit to move the money into an RFC account on your return. That conversion is useful if you want to keep the money in dollars.
A simple plan for most returning NRIs: tell the bank your return date, let NRE RDs that are close to maturity run out as resident RDs, and use the money from the ones you close for whatever comes first, usually an Indian emergency fund or a home down payment. The NRI planning hub sets out the full return-to-India sequence.
Common mistakes with NRI recurring deposits
- Running an NRO RD on foreign salary. You pay 31.2% TDS on interest that could have been tax-free, and the money is then stuck behind the US$1 million NRO limit.
- Opening an NRE RD for less than a year. RBI's minimum is one year. If you need the money sooner, an NRE RD is the wrong product.
- Thinking "tax-free" means tax-free at home. The exemption is Indian. Check how your country of residence treats interest from Indian accounts, and what it asks you to report.
- Not telling the bank you've moved back. Interest that keeps being credited as NRE after you become resident is still taxable, and you'll owe that tax later.
- Expecting the senior citizen rate. NRI deposits don't get it. HDFC Bank's card limits it to resident senior citizens.
Where an RD fits
An RD gives you a fixed rate on money you set aside every month, nothing more. For goals of three years or less, such as a down payment, school fees or a return-to-India buffer, an NRE RD is a simple, tax-free home for monthly remittances. Over longer periods, the same monthly amount usually belongs somewhere with better long-run returns, and that choice depends on your country of residence and your plans. Once the RD matures, our guide to repatriating money from India covers sending it back abroad. Run your own instalment, rate and tenure through the RD calculator before you book.