Holding of NRE account by a foreign citizen , whether interest income is exempt ?

A person who is an Indian but holds a Singapore citizenship. He has been living in India, for more than 2 years. He still holds NRE account and claims that the interest is exempt from tax.   Bank is allowing him to continue to hold the NRE account and is not deducting TDS because he is a foreign citizen. Is the legal position correct?

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