Q5: Vikram holds an NRE Fixed Deposit (FD), for a 3-year term. Due to a medical emergency, he requests the bank to close the FD, after only 8 months. What will be the impact, on the interest payable?

The bank will pay interest at the savings account rate.

The bank will pay the contracted interest rate, minus a 1% penalty.

No interest will be paid on the deposit.

The principal amount will be returned only in Indian Rupees, not repatriable currency.

✅ Correct Answer: C

For NRE Term Deposits, no interest is payable if the deposit is closed before completing the minimum period of one year.

The principal remains repatriable.

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