Learn how NRIs can benefit from FCNR Fixed Deposits to grow their idle savings!
Get up to 9.40% p.a. interest, inclusive of additional benefit of 0.50% p.a. for senior citizens and 0.10% p.a. for women
Indian banks offer the Foreign Currency Non-Resident (FCNR) fixed deposit account to Non-resident Indians (NRIs) and Persons of Indian Origin (PIOs). The account allows you to deposit and maintain your foreign earnings in currencies such as US Dollar (USD), British Pound (GBP), and Euro (EUR), among others.
In the case of FCNR FD accounts, the principal and interest are freely repatriable. This means they can be transferred back to the account holder’s home country without any restrictions. However, these accounts are subject to specific regulations and terms. FCNR fixed deposit interest rates can vary based on the currency and the tenor.
Features and Benefits of Investing in an FCNR Fixed Deposit
Flexibility
Investors can deposit funds in multiple currencies, aligning with RBI's approved list, without converting to Indian Rupees, providing flexibility
Taxation
FCNR fixed deposit interest rate earnings are not subject to taxes
Deposit Tenor
As a term deposit of 1 to 5 years, the FCNR account allows NRIs to earn stable interest rates, regardless of residency changes
Nomination Facility
NRIs can nominate either an NRI or an Indian resident for their FCNR accounts
Joint Account Holding
An FCNR account can also be opened with two or more joint NRI account holders
Loan against FD
FCNR account holders can receive loans from banks by pledging their stored funds as collateral
Investment Transfer
Interest earned on FCNR accounts, including the principal amount, are transferable
No Exchange Risk
As funds are held in foreign currency, there's no exchange rate risk since they're transferred in the same currency
Repay Debts
Any maturity proceeds earned in an FCNR FD account can be used to repay or settle foreign currency loans availed beyond India
- You must provide the following documents to open an FCNR FD account:
Valid passport with a recent passport-size colour photograph of yourself
Work/residence permit or residence/employment Visa to confirm your NRI status
Proof of address in your resident country
Copy of your Form 60 or PAN card
NRI seafarers must provide a Continuous Discharge Certificate (CDC) copy with a disembarkment stamp on the last page
NRI seafarers may also be asked to provide a Foreign Exchange Management Act (FEMA) declaration
PIOs need a valid PIO/OCI card and a signed declaration to prove their PIO status
In order to open an FCNR account, you will have to provide certain documents to your selected bank or NBFC. These may include visa, passport, KYC, and a Foreign Account Tax Compliance Act (FATCA) declaration, along with address and identity proofs. You may also be required to submit your income documents as well.
Following this, you will be provided with your account details and be intimated about any other follow-up actions.
NRIs can open three types of different accounts to store their funds in, namely NRO, NRE and FCNR accounts. These can be opened with most authorised banks and come with their own set of features. The differences between them are as follows:
Particulars |
NRO (Non-Resident Ordinary account) |
NRE (Non-Resident External account) |
FCNR (Foreign Currency Non-Resident account) |
Function |
Allows you to deposit income earned in India |
Allows you to deposit income earned abroad |
Allows you to deposit foreign currency earnings in Indian accounts |
Currency Involved |
INR |
Foreign currencies |
RBI-approved foreign currencies |
Foreign Exchange Risks |
No risks involved |
Subject to such risks |
No risks involved |
Withdrawal Currency |
INR |
INR |
Deposited foreign currency |
Taxation |
Applicable taxes up to 30% |
Non-taxable |
Non-taxable |
Joint Account Opening with Indians |
Allowed |
Not allowed |
Not allowed |
Loan Against Deposits |
Available in INR |
Available in INR |
Available in foreign currencies with some restrictions |
You will be able to transfer funds from your NRE account opened in India or any other foreign currency account outside India, to your FCNR account. During the process, this amount will be converted into foreign currency present in the FCNR FD account at the current exchange rates and deposited accordingly.
However, it is important to remember that you will not be able to fund your FCNR fixed deposit via a third-party account.
FAQs
In case I debit my NRE account and open an FCNR Fixed Deposit, would there be any charges?
Booking an FCNR fixed deposit from an NRE account typically incurs no charges at most banks.
Are my FCNR Fixed Deposits funds repatriable?
Yes, the funds in FCNR FDs are easily repatriable.
Is interest earned on the FCNR account taxable in India?
The interest you earn on your FCNR account is tax-free in India.
What is the tenor for which I can open an FCNR Deposit?
You can open an FCNR deposit for a tenor ranging from 1 year to 5 years.
Can I close my FCNR Deposits prematurely?
Yes, you can close your FCNR Deposits before the due date. If the deposit is closed prematurely before the completion of one year, no interest will be paid.
Can I transfer the FCNR (B) FD closure proceeds to a third-party account?
No. FCNR closure proceeds can only be transferred to an account where the FCNR account holder is a primary applicant.
Can I appoint a mandate holder for my FCNR/RFC/NRE/NRO Fixed Deposits accounts?
Yes, a Non-Resident Indian (NRI) who has an NRE/NRO account can appoint a resident Indian as a mandate holder. The mandate holder can manage the account on behalf of the NRI.
Can I get loans against my FCNR Deposits?
Yes, depositors can apply for loans against their FCNR deposits. The loan amount will be sanctioned depending on the currency of the FCNR.
Can I have a Nominee for my FCNR Deposits?
Yes, you can appoint a nominee for your FCNR FD.
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