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5 Mistakes NRI Fixed Deposit Investors Must Avoid


by Mahindra Finance


April 26, 2024


5 mins read


Investing in fixed deposits is a popular choice among non-resident Indians (NRIs) who are looking for a secure and stable way to grow their wealth. However, there are certain mistakes that can reduce the potential FD returns on your NRI fixed deposits. There are various types of NRI Fixed Deposits in India. To help you make the most of your investments, we have put together this guide on the five mistakes you must avoid. By understanding these pitfalls, you can ensure that your money grows effectively and achieves your financial goals.

1. Not Having a Financial Goal:

One of the biggest mistakes NRIs make when investing in NRI fixed deposits in India is not having a clear financial goal. Many treat an FD as just an amount parked in India to earn a higher interest rate. However, by aligning your investment with a specific financial goal, you can maximise its utility. Consider factors such as the maturity period, interest rate, and liquidity needs before making any investment decisions.

2. Ignoring Liquidity Needs:

Another common mistake is ignoring immediate and short-term financial needs when investing in NRI fixed deposits in India. It's crucial to consider your liquidity requirements before locking in your funds for an extended period. Premature withdrawals from fixed deposits may attract penalties, reducing your overall FD returns.To manage your liquidity needs effectively, opt for NRI FD in India with diverse lock-in periods. Mahindra Finance, for example, offers NRI Fixed Deposits with lock-in periods ranging from seven days (for NRO FD) to 10 years. By choosing the right lock-in period, you can ensure that you have access to your funds when you need them without incurring any penalties.

3. Opening a single FD:

Investing all your funds in a single NRI FD in India can be a risky move. When you have specific financial goals in mind, it's important to spread your investments across different deposit amounts and periods. This diversification strategy ensures that your funds mature at different times and aligns with your financial goals.

For instance, let's say you have ₹20 lakhs to invest. Instead of depositing the entire amount into a single FD, consider dividing it into multiple smaller deposits with varying maturity periods. This way, if one FD matures before another, you will have access to a portion of your funds without having to break the entire investment.

4. Not Comparing Interest Rates:

Failing to compare fixed deposit rates for NRI offered by different banks and financial institutions is a mistake that can cost you valuable FD returns on your NRI fixed deposits. Each bank or institution may offer slightly different fixed deposit rates for NRI, so it's important to research and compare before making a decision.

As an NRI investor, you have options like Non-Resident External (NRE), Non-Resident Ordinary (NRO), and Foreign Currency Non-Resident (FCNR) deposit accounts. Take the time to compare interest rates for these different types of accounts across various banks and financial institutions. By doing so, you can ensure that you are getting the best possible returns on your investment.

5. Failing to Track the Debt Market:

The interest rates offered on fixed deposits are influenced by changes in the debt market. The Reserve Bank of India's policy decisions and inflation rates play a significant role in determining the interest rates on FDs. Failing to track these factors can result in missed opportunities for higher returns.

Keep an eye on the RBI's policy decisions and regularly monitor inflation rates. During times of high inflation, the real income from fixed investments like FDs may be relatively low. By staying informed about market conditions, you can make better-informed investment decisions and potentially earn higher returns on your NRI fixed deposits.


Investing in NRI fixed deposits can be a great way to grow your wealth and achieve your financial goals. However, it's important to avoid common mistakes that can hinder your returns. By having a clear financial goal, considering liquidity needs, diversifying your investments, comparing interest rates, and tracking the debt market, you can maximise the potential of your NRI fixed deposits.

Mahindra Finance offers attractive interest rates across its range of NRI fixed deposit products. Its digitised process makes it convenient to choose the right type of interest payout, customise FD renewal instructions, and remit funds in foreign currency without visiting a bank. Take advantage of these features to enhance your NRI fixed deposit experience and make the most out of your investments.


Q: Can NRIs open fixed deposit accounts in India?

A: Yes, NRIs can open fixed deposit accounts in India through designated banks authorised to offer NRI banking services.

Q: Are the interest rates on NRI fixed deposits higher than regular fixed deposits?

A: The interest rates on NRI fixed deposits may differ from regular fixed deposits. It is advisable to compare the rates offered by different banks and financial institutions to find the best option.

Q: Can NRIs prematurely withdraw their fixed deposits?

A: NRIs can prematurely withdraw their fixed deposits, but it may attract penalties or charges depending on the terms and conditions of the bank or financial institution.

Q: Are NRI fixed deposits taxable in India?

A: The taxability of NRI fixed deposits depends on various factors such as the type of deposit and the individual's residential status. It is advisable to consult a tax professional or financial advisor for accurate information regarding taxation.

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