The Reserve Bank of India doubled equity investment limits for NRIs, OCIs, and Persons Resident Outside India (PROIs) on June 5, 2026, marking a significant expansion in overseas investment opportunities. Individual NRI, OCI, and PROI investors can now hold up to 10% of a listed company's paid-up capital, up from the previous 5% limit. The combined limit for all NRI, OCI, and PROI investors in a company increased to 24% from 10%, eliminating the need for companies to pass shareholder resolutions to raise the ceiling. This change allows NRIs to invest in Indian stocks without requiring SEBI registration, making the process simpler for overseas investors. The RBI's announcement came at the close of the Monetary Policy Committee meeting, with the central bank also expanding the Fully Accessible Route for government securities and adding incentives for FCNR(B) deposits. Under the revised rules, PROIs are now permitted to invest in equity instruments of listed Indian companies through the Portfolio Investment Scheme, which was available only to NRIs/OCIs, with the same investment limits and simplified onboarding processes.
NRE accounts offer complete tax exemption on interest income for Non-Resident Indians, making them highly attractive for foreign income management. According to reports from Mint, interest earned on NRE fixed deposits remains fully exempt from income tax in India as long as the account holder qualifies as a non-resident under tax laws. The most significant advantage is that banks do not deduct TDS (tax deducted at source) on these deposits, enhancing their appeal for NRI investors. However, the income earned via such accounts can be taxable at the NRI's country of residence depending on the rules and regulations set by the government of that particular country. Unlike resident investors, NRIs face tighter restrictions in stock market trading. In the cash market, only delivery-based transactions are allowed - intraday trading and short selling are prohibited. An NRI must take delivery of shares purchased and can sell only shares already held in the demat account.
Indian banks currently offer NRE fixed deposit rates ranging from around 6% to nearly 8% per annum, making them an attractive option for NRIs seeking stable returns. As reported by Mint, DCB Bank offers rates of up to 8.05%, while IndusInd Bank offers up to 7.99% on select tenures. Among public sector lenders, Canara Bank offers up to 7.40%, while Punjab & Sind Bank, Union Bank of India, Bank of Baroda, State Bank of India and Punjab National Bank offer rates largely in the 6.5%-7.3% range. Federal Bank, Karnataka Bank, Kotak Mahindra Bank and Saraswat Co-operative Bank also offer rates ranging between 7% and 7.5% across various maturities. Financial experts advise NRIs to compare rates across tenures rather than focusing solely on one-year deposits, as many banks offer their highest rates in the two- to five-year maturity bucket.
Both principal and interest amounts are fully repatriable from NRE accounts, allowing NRIs to transfer funds abroad without restrictions. As reported by Mint, these accounts can be in the form of savings, current, recurring, or fixed deposits with rates ranging from around 6% to nearly 8% per annum, depending on the bank and tenure. NRE FDs do not offer the higher interest rates available to senior citizens on many domestic fixed deposits, with NRI depositors above the age of 60 typically earning the same interest rate as other NRE fixed deposit holders. The accounts are designed to facilitate free repatriation of funds while maintaining Indian rupee denomination. There is no upper limit on how much money NRIs can keep in India, with NRIs able to hold any amount in NRE, NRO, and FCNR(B) accounts and in Indian investments. Investments made through NRE accounts generally allow free repatriation of capital and income, while NRO accounts are used for income earned in India and carry limits on repatriation.
NRE fixed deposits come with specific withdrawal conditions that differ from regular deposits. According to Mint, if an NRE FD is closed before completing one year, no interest is paid. If the deposit is withdrawn after one year but before maturity, the investor receives interest applicable to the actual period the deposit remained with the bank rather than the contracted rate. Banks may also impose premature withdrawal penalties, and any excess interest already paid through monthly or quarterly payout options may be recovered from the principal amount. NRI depositors can choose between cumulative and non-cumulative payout options. Under cumulative deposits, interest is paid at maturity along with the principal, while under non-cumulative options, interest can be credited monthly, quarterly, half-yearly or annually. Monthly payout options are generally offered at slightly lower effective rates than cumulative deposits.
NRE accounts differ significantly from NRO accounts in their purpose and tax treatment. According to Mint, while NRE accounts are meant for foreign income remitted to India, NRO accounts are typically used to manage income earned within India, such as rent, dividends, interest, or pension. An NRI must have a NRE or NRO account in India as they cannot have a savings account in their name in India, according to Foreign Exchange Management Act (FEMA) guidelines. NRO account interest is fully taxable in India, with banks required to deduct tax at source while crediting amounts, while NRI account interest remains tax-free. Recent RBI updates have clarified that OCIs now have clearer investment rights closer to those of resident Indians under the revised norms. For mutual funds, NRIs and OCIs can invest in Indian mutual funds after completing KYC formalities and can do so on both repatriable and non-repatriable bases. However, some fund houses do not accept investments from NRIs based in the US and Canada because of stringent overseas regulatory requirements. If you live in the US, your American duties continue and your Indian bank and demat accounts count toward FBAR reporting once your total foreign balances cross $10,000, and FATCA disclosure rules still apply.
