FCNR Deposits: What NRIs Need to Know

FCNR Deposits: What NRIs Need to Know

An FCNR account denotes a Foreign Currency Non-Resident account with an Indian bank. Resident Indians can’t open this kind of account. FCNR is an attractive and safe investment option for NRIs. However, this isn’t yet among the most favored NRI investment options.

What is an FCNR account?

An FCNR account is a term deposit facility that you can maintain in designated foreign currencies. It’s akin to a Fixed Deposit (FD) facility for resident Indians. You would earn fixed interest in your FCNR account deposits.

What are the currencies?

As per the rules of the Reserve Bank of India (RBI), you can open your FCNR account with any permitted currency. The accepted currencies might vary slightly from bank to bank. But the major currencies that Indian banks accept for opening FCNR accounts include U.S. dollars, Euros, British pounds, Canadian dollars, Australian dollars, Japanese yen, Singaporean dollars, etc.

A few features of the FCNR account

  • The tenure varies between one and five years.
  • Only an NRI can become a joint holder in this account.
  • You can convert the currency freely to the Indian rupee (INR).
  • The funds are fully repatriable.
  • The account is safe from currency fluctuation risks.
  • The principal and interest are not taxable in India.
  • The rates of interest on FCNR deposits vary based on the bank and the currency, and they are subject to the ceiling as mandated by the RBI.
  • The interest is payable at the end of the first year. Thereafter, you earn half-yearly compounded interest.
  • Nomination facility is available. The nominee can be an NRI or a resident Indian.
  • You can obtain a loan against this account, subject to some terms and conditions.
  • You can go for premature withdrawals. However, such withdrawals might incur penalties from the bank.
  • The account will run its course even if your status changes from NRI to resident Indian during the tenure.
  • Renewal of the deposit facility is possible. You need to complete the formalities within 14 days after maturity.

How to transfer funds to the FCNR account?

  • Via electronic transfer from your overseas account
  • From your existing NRE account
  • With foreign currency notes while you are visiting India

Documents required for opening an FCNR account

  • Copy of your valid passport
  • Copy of your visa
  • Statement from your overseas bank account
  • Proof of your residence abroad
  • FATCA Declaration (if applicable)

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