A Non-Resident Indian (NRI) or Person of Indian Origin (PIO) can invest and maintain a term deposit in foreign currency in an account called FCNR (Foreign Currency Non-Resident Account). They can also earn interest from this term deposit. Only a few foreign currencies are accepted as deposit in FCNR Fixed Deposit accounts. The list of currencies that are accepted are:
BP (British Pound)
USD (US Dollar)
AUD (Australian Dollar)
JPY (Japanese Yen)
CAD (Canadian Dollar)
These accounts are not savings accounts rather they are fixed deposits accounts.
FCNR term deposits rates
As per the SBI (State Bank of India) website the updated FCNR rates of interests on investing deposit in different currencies are:
Some of the advantages of maintaining term deposits in FCNR are:
A deposit in an FCNR account is maintained in foreign currency which eliminates the problem of dealing with constant fluctuation of currency conversion rates.
The maturity term of these deposits ranges from 1 to 5 years.
The interest rates earned on these deposits are regulated by the RBI and are the same in all banks across the country although the rates of interest are generally higher than those provided by the countries wherein the NRI is residing.
FCNR (Foreign Currency Non-Resident) account can be only be opened by a PIO or NRI.
As the name states, a Foreign Currency Non-Resident account can only be opened with foreign currencies which eliminates the risk of fluctuating conversion rates.
An interest is paid on the FCNR account. It is controlled by the RBI and is the same across all banks.
The FCNR is not a savings account but is a term deposit. The term should have a minimum maturity of 1 year and a maximum maturity period of 5 years.
This account also has a nomination facility. The nominee can be any NRI, PIO or resident Indian.
The NRI or PIO can even apply for a loan facility against an FCNR account but these loans can't be used for real-estate, agricultural activities, or re-lending.
The currency available in the account can be changed to another currency but the cost incurred due to the difference in the value of the currencies is to be beared by the account holder.
The interest earned on these accounts are completely tax free and so is the principal. Although these accounts are subjected to wealth tax.
Frequently asked questions
Can an FCNR holder transfer funds from a third party account?
Funds can be transferred from a third party account only if the person who sends money to the FCNR account and the person who receives the money from the account are the same.
What is the consequence when an FCNR account holder’s fixed deposit matures and he or she forgets about it?
In this case, most banks will automatically renew the fixed deposit account and the account holder will keep earning the interest on it although there is an option to stop the automatic renewal. The account holder can open the account with the bank under non-renewal mode and give additional instructions as to what the bank should do on maturity of the term deposit.
Can an NRI or PIO open an FCNR account as a joint account with another person who is a resident of India?
Yes, an NRI or PIO cannot open an FCNR account as a joint account with another person who Is a resident of India.
Is an FCNR account holder liable to protection against fluctuation in the value of the Indian currency?
Since any funds in an FCNR account are to be maintained in the respective foreign currency and conversions into Indian rupee is not allowed, FCNR account holders are not affected by fluctuation in the Indian currency.
Is interest earned on an FCNR account taxable?
No, interest earned on an FCNR account is not taxable.
Can loans related to an FCNR account be paid through local resources?
Yes, loans related to an FCNR account can be paid through local resources.
What happens to the FCNR account of the NRI when he or she returns to India?
For an NRI returning to India, he or she can wait till the time the FCNR account matures and then convert it into an RFC account.
Is there an exchange loss when a returning NRI transfers funds from an FCNR account to an RFC account?
No, there is no exchange loss when a returning NRI transfers funds from an FCNR account to an RFC account.
Can funds be withdrawn from the FCNR account before the deposit has matured?
Yes, a withdrawal is allowed from the FCNR account before the term has matured at the discretion of the bank but there is a penalty charge levied for the withdrawal. For premature withdrawals concerning FCNR accounts, no interest is to be paid by the bank to the account holder and further money may be charged by the bank to cover swap costs.
Banks who were offered a swap facility from the RBI to attract foreign currency non-resident (FCNR-B) scheme in September 2013 will not get a similar facility if they decide to rollover the deposits when these mature later this year.
RBI governor Raghuram Rajan the country had attracted around $32 billion of deposits with two maturities over a period of about two months. There could be an impact on either liquidity or the forex markets. However RBI is prepared for such a change.
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I have invested some money as a Fixed deposit in HDFC Bank and the interest rate is not that much great because they are giving interest as compared to others. I have invested the money of Rs. 3L and there is a locking period of 5 years. Its 7% interest rate. If they are increasing the interest rate, it would be fine. Since I do all my transactions with this bank, I have selected same for my FD as well.
I have chosen my fixed deposit scheme from State bank of India because I'm maintaining my salary account with them and they provided rate of interest is fine for me. I have invested the money of Rs. 2.75 lakhs. There is a locking period of 45 days. They are giving interest rate of 4.5%. Overall, I'm satisfied with their services.
I have been investing the money of Rs. 3 lakhs for the fixed deposit. I have selected Kotak mahindra bank for the FD because their net banking facility is very different when i compared to other. I can access everything regarding the account hence its easy to handle the transactions. I'm not sure about the interest rates. 7 months before, i have invested the money.
Its because of the competitive interest rates, i have selected the Fixed deposit in Kotak Mahindra bank. I have invested the fixed deposit 1.5 years ago and there is a lockin period of 5 years. They have invested the amount of Rs. 7.5 % and the employees are helpful in the branch.
I have a Fixed deposit in Axis bank. I have invested the money of Rs. 10000 for two FDs. There is a lockin duration of 1 year. They are giving a interest rate of 7%. Through net banking, i have activated this Fixed deposit. There is no tax benefits available. Axis bank service has been good. Overall, I'm happy about their services.
Since last 15 years, i have a account with Oriental bank of commerce thats the reason i have invested the money in fixed deposit with the same bank. I have invested the amount of Rs. 11 lakhs. They are giving the interest rate of 6.5%. There is no locking period but i have chosen the duration of 1.5 years. There is no additional charges deducted for this fixed deposit.
Interest rate is very low in Indian post office Fixed deposit scheme because they are providing only 8.5%. I have chosen this office because of the child benefits. I have invested the money of Rs. 1.5 years. Its 3 years lock in period. Overall, I'm satisfied with the service provided by post office employees.
I have invested the money in SBI for a fixed deposit and based on my wife recommendation i have chosen it. They are providing the interest rate of 7.25%. They have option to select the lock in period in that i have chosen 5 years. We had visited their branch and the response was good.
Its easy accessible and to redeem so that i have invested the money in Fixed Deposit with HDFC BANK. I have invested the money of Rs. 2.5 lakhs and they have provided me a interest rate of 7.5%. There is no locking period. I didn't got any additional charges till now.
I have paid the money of Rs. 4.5 lakhs as a fixed deposit in the Indian post office. For the safety purpose, i have chosen the post office account. They are offering me a interest rate of 7.9%. There is a lockin period of 5 years. If i withdraw the money in 1 year, they will reduce the interest rate of 2% and after 3 years, its 1%.
Interest rates are less in Central Bank of India so I had taken a fixed deposit. I have invested the money of Rs. 1 lakh in my wife's name. Branch is near from my place so I have chosen this bank. Yearly once, I get the money of Rs. 6,765 for the interest. There is a locking period of 1 year.
I am doing Fixed Deposit with ICICI BANK and its been around 5years. They haven't been paying good interest and its more or less same like other banks as I used to hold my salary account with ICICI, I have decided to be with one bank. There is no locking period and its flexible. They do give good support and the app is user friendly. Even deposit account can be opened through i-mobile or net banking itself.
I had a Fixed Deposit in State Bank of India, I have completed the tenure before 3months ago. I have no issues with the customer service. They are given me 7% interest rate for 2years. There is no profit and processing fee. I got an online access, where I can check the interest rate anytime on the YONO app or else SBI online.
I have invested some money through FD. My salary account is in SBI so i have a zero ATM charges and the limit is not actually set by SBI. They do have short term FDs which is pretty good. I have invested the money of Rs. 60000 and the interest rate is 10.01% for the tenure period of 16 months. There is no lockin period. There is no hassle to getting the money back.
I have invested the money in Dena bank through Fixed deposit and the growth is not that much good. They are not taking any hidden charges. Only because of the Government undertaken bank, i have selected them. They are providing a interest rate of 6% per annum. I have invested the money of Rs. 2 lakhs. There is a lockin period of 1 year.
I have opt for fixed deposit for the tax saving purpose because I have chosen five years tenure with AXIS Bank, still its going on. Only once I Invested my money it has the locking period of five years. I have option to check my transactions through mobile app. But I have concern about the interest rate is very lesser for this FD.
I had fixed deposit with SBI then I withdrawn the amount, I done Rs. 3 lakhs of investment on my daughter name then I taken the liquidity to purchase the land, at the time I struggled a lot to take that money because the process was difficult to withdrawn the money after seven months of tenure.
I had a Fixed Deposit with Union Bank of India and its closed 18 to 19 months due to personal reasons. I am doing investment but my experience is not good with FD account. In my home town, there is no other banks so just decided to go with this bank. The returns are good.
I have one FD with HDFC, I deposited Rs. 1 lakh, I was opt for 45 days of tenure. Finally I got 6.25% of interest for 45 days. It won't cover the tax, if we need tax benefits we should go for five years term. I can track the details through netbanking, on the maturity date the amount credits automatically in the account. Even the notification can customized.
HSBC staff wrongly pre closed my fixed deposit .. and calculated the interest rates wrongly and when asked them for clarification never got back .. even after following up with them repeatedly for more than 3 months.. would highly recommend not using their services.
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A V kumar
Reviewed on Aug 24, 2019