• Pros and Cons of FCNR deposit

    Non Resident Indian (NRIs) who would like to open an account in India have several options to choose from such as NRE Fixed Deposit Account, Non-Resident Ordinary (NRO) Savings Account and Foreign Currency Non Resident (FCNR) Fixed Deposit Account among others.

    There are several factors which NRIs should consider before choosing to open an account in India such as the following:

    Factors galore

    • Family factor:

      Can a relative or family member of the NRI in India operate the account with a mandate card provided by the bank?

    • Source factor:

      Should the funds in the account be deposited from sources in abroad only or from India as well?

    • Currency factor:

      What are the currencies in which the account can be opened and the associated risk of currency rates?

    • Tax factor:

      Will the principal and the interest in the account come under the purview of tax laws in the country.

    • Repatriability factor:

      Can the funds be converted back to the foreign currency?

      According to experts, FCNR play a significant role in terms of attracting remittances from NRIs. It is, in some ways, a unique financial instrument in that unlike NRE and NRO accounts, FCNR accounts can be opened as term deposit accounts only. FCNR accounts can be opened from overseas by submitting copies of passport and visa of the account proposer in addition to bank accounts held overseas, proof of foreign residence and income documents among others.

      Interest rates offered for FCNR accounts may vary depending upon the type of currency and the bank. For instance, FCNR deposit (one year) in USD may be around 2.5 to 3% but could be pegged at 5% for the Australian dollar.

    Foreign Currency Non Resident (FCNR) Fixed Deposit Account

    Some of the advantages of the Foreign Currency Non Resident (FCNR) Fixed Deposit Account are as follows:

    • FCNR accounts are protected against forex rate risks (changes in the value of rupee vis-a-vis the currency in which the account is denominated) as they are maintained in a foreign currency. In other words, the principal and the interest are transferred in the currency in which the account is maintained sans any loss of exchange.
    • Interest earned on FCNR deposits in India is exempt from Income tax.
    • FCNR accounts can have two or more NRIs joint account holders. However, joint account with another person resident in India is not permitted.
    • FCNR accounts are denominated in several major currencies such as Pound Sterling, US Dollar, Yen and Euro.
    • In FCNR accounts, both principal and interest are freely repatriable. In other words, the interest earned and the deposit amount on the deposits are repatriable to the depositor's country of residence sans restrictions.
    • FCNR accounts are offered for not less than 1 year and not more than 3 years.
    • All authorized banks which offer FCNR accounts set the interest rates within the ceiling as announced by the Reserve Bank of India. Interest rates on FCNR term deposit accounts should, therefore, be set by the board of directors of a particular bank, under the broad mandate of RBI regulations.
    • Interest rates on FCNR term deposits are payable after the end of first year. Interest is compounded on a half-yearly basis subsequently.
    • Rupee loans against funds held in the FCNR accounts can be provided to account holder for any investment in India. Foreign currency loans outside India permitted to the account holder, can be repaid from the maturity proceeds. Some banks may also provide loans to firms or companies against the collateral of FCNR accounts.

    FCNR and Current Account Deficit

    RBI, in a bid to attract more foreign exchange into the country, may announce a 'bonanza', as it were, for NRIs by offering high interest rates on FCNR deposits. According to experts, increased inward remittances from NRIs, lead to more forex reserves, which in turn, reduce the current account deficit (CAD) of the country. The current account deficit is one of the main reasons of depreciation of the rupee. According to experts, any tapering of quantitative easing (QE) by the US Federal Reserve Bank, raises fears of less capital investment in India by foreign institutional investors (FIIs).

    Attracting NRI deposits through FCNR deposits

    While raising interest rates under the FCNR deposit scheme may prove beneficial for NRIs, RBI have certain protective measures for banks in India such as facility of swapping the US dollar funds at a fixed rate (usually 3.50%). The swap facility and the high interest rates offered on FCNR deposits can cease with prior notice since they reportedly expose the RBI to incur losses running to thousands of crores. The RBI, therefore, may discontinue the said facility and reduce interest rates if it attracts the desired forex reserves into the country.

    Some of the disadvantages of the Foreign Currency Non Resident (FCNR) Fixed Deposit Account are as follows:

    • If FCNR deposits are held with a weak bank, it may be unable to pay back upon maturity. Credit guarantee in India covers accounts in India to around Rs. 100,000 or 1600 USD, which is considered low. Many experts, therefore, believe that deposit insurance is almost non-existent in India, which could be a concern for FCNR deposit account holders.
    • In the event of a financial meltdown, banks may not be able to repatriate funds. The Greek crisis is a case in point. In some cases, Greek citizens, were reportedly, restricted from withdrawing over 40 euros from their accounts.
    • If FCNR deposit is withdrawn in less than one year, no interest is payable.
    • Foreign currency loans in India against FCNR accounts can be taken by account holders only.
    • FCNR deposits are offered for term deposits only and not for current, savings and recurring accounts.
    • FCNR account can be transferred to other NRE accounts before maturity. However, penalties will apply for premature withdrawals. Also, swapping charges are fixed by the bank in which the FNCR account is held.
    • FCNR accounts can be renewed within 14 days after maturity, failing which, the bank will fix interest rate on renewal. If renewed accounts are withdrawn before a fixed period, banks can take back the interest paid.
    • While the interest earned on FCNR deposits is tax-free, it may be taxable in the country of residence of NRIs. Also, Non Resident Indians, should consult tax experts to understand the implications of investing in India.
    • While RBI, under the Foreign Exchange Management Act, formulates rules of investment for NRIs in India, the Government of India, under the Indian Income Tax Act frames the tax rules, which are subject to change.

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    Pros and Cons of FCNR deposit Reviews

    • SBI Fixed Deposit
      "FD process should be simpler"
      0.5 1.0/5 "Really Bad"
      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.
      Was this review helpful? 4
      , madurai
      Reviewed on Sep 03, 2019
    • Union Bank of India
      Union Bank of India Fixed Deposit
      "Not good"
      0.5 3.0/5 "Satisfactory"
      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.
      Was this review helpful? 4
      , bangalore
      Reviewed on Aug 28, 2019
    • HDFC Bank Fixed Deposit
      "Good to go with HDFC"
      0.5 5.0/5 "Blown Away!"
      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.
      Was this review helpful? 2
      , bangalore
      Reviewed on Aug 27, 2019
    • HSBC Bank Fixed Deposit
      "wrong calculation of interest rates"
      0.5 0.5/5 "Unacceptable"
      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.
      Was this review helpful? 2
      , visakhapatnam
      Reviewed on Aug 24, 2019
    • SBI Fixed Deposit
      "Excellent"
      0.5 5.0/5 "Blown Away!"
      I do have a Fixed deposit account with SBI and it was carried out by Mom and even I have account for my daughter. Its still running and they have Google application separately to access online. The returns are good. I am doing monthly investment and it was opened quite a long may be 4 years.
      Was this review helpful? 2
      , ahmedabad
      Reviewed on Aug 23, 2019
    • ICICI Bank Fixed Deposit
      "Good"
      0.5 5.0/5 "Blown Away!"
      I just opened a Fixed Deposit with ICICI BANK and have not done any survey on this. I am account holder with them so it was easy to do FD account even they are providing 7% interest rate. The process is very user friendly and never faced any hassle. I could access this account via online.
      Was this review helpful? 3
      , new delhi
      Reviewed on Aug 21, 2019
    • Post Office Fixed Deposit
      "Good for future"
      0.5 3.0/5 "Satisfactory"
      In post office rate of interest is higher for the fixed deposit when compared to the bank, I invested Rs. 5000 on monthly basis its comes in a year Rs. 60,000 after 5 years I got Rs. 3.75,000 I got Rs. 75,000 extra. The service is not comfortable if we have any relative who working there it would supportive or else difficult.
      Was this review helpful? 6
      , burdwan
      Reviewed on Aug 09, 2019
    • SBI Fixed Deposit
      "Good for future saving"
      0.5 5.0/5 "Blown Away!"
      I have FD with SBI, I have opt for one year term there is no such limitation for depositing the money. The interest rate is good for the FD, the online banking is convenient to take liquidity. They resolve the queries on time. Its most safe and secured.
      Was this review helpful? 3
      , visakhapatnam
      Reviewed on Aug 08, 2019
    • SBI Fixed Deposit
      "Average"
      0.5 4.0/5 "Great!"
      I have selected state bnak of indis fixed deposit amount 1 lakhs , Tenure 5 years and Rate of interest 8 percentage after renewal fixed deposit 6 percentage is very less .while document directly bank . Customer service is not good and responsive.
      Was this review helpful? 6
      , kochi
      Reviewed on Aug 05, 2019
    • Kotak Fixed Deposit
      "Excellent Banking"
      0.5 5.0/5 "Blown Away!"
      I activated FD account with Kotak, I have been maintaining this account since when I opened saving account, I converted Rs. 5000 for one year. They are providing interest around 7.6% per annum, the online netbanking and mobile app is very convenient for deposit to FD.
      Was this review helpful? 3
      , mumbai
      Reviewed on Aug 03, 2019
    • ICICI Bank Fixed Deposit
      "Good"
      0.5 4.0/5 "Great!"
      I have invested my FD with ICICI BANK and also have a 3in1 account with them. The interest rate is pretty good. Recently started before 6months, I can do premature withdrawal and also have selected a locking period of 3 years. The customer service is good and overall am satisfied with this bank.
      Was this review helpful? 3
      , mumbai
      Reviewed on Aug 01, 2019
    • Post Office Fixed Deposit
      "Safe and Secured"
      0.5 4.0/5 "Great!"
      My Post office branch is located in own campus hence there is no queue. I opened the fixed deposit, I made one time investment for five years its has tax exemption. They are providing 7% of interest for per annum. I believe it has online access as well.
      Was this review helpful? 6
      , bangalore
      Reviewed on Aug 01, 2019
    • SBI Fixed Deposit
      "Too much good scheme"
      0.5 5.0/5 "Blown Away!"
      Chosen my fixed deposit from State bank of India. I have invested the money of Rs. 57000 and SBI is a most popular bank all over the India and offering all the facilities compared to bank. Since i have a salary account with them, its easy to transfer the money. They are providing the interest rate of 6.5%.
      Was this review helpful? 2
      , kolkata
      Reviewed on Jul 31, 2019
    • Union Bank of India Fixed Deposit
      "Good Investment"
      0.5 4.0/5 "Great!"
      Union of India fixed deposit is same as other investment. Being an existing customer I have opt for one year of fd, the online banking feature is good to open and closing the account, they was no charges for the liquidity of fund before the maturity.
      Was this review helpful? 1
      , mumbai
      Reviewed on Jul 29, 2019
    • SBI Fixed Deposit
      "Good investment plan"
      0.5 4.0/5 "Great!"
      Chosen my fixed deposit from state bank of India because the given rate of interest is high. They are not deducting any service charges. I have invested the money of Rs. 1 lakhs and there is no lockin period and i have chosen the plan for 1 year and they are giving a interest rate of 6.75%.
      Was this review helpful? 7
      , bangalore
      Reviewed on Jul 25, 2019
    • HDFC Bank Fixed Deposit
      "GOOD"
      0.5 5.0/5 "Blown Away!"
      I am using the savings account with HDFC BANK since from last 5 years, the reason for taking the fixed deposit was they are giving good rate of interest. The application is easy to use with the bank and to check the status of the account.
      Was this review helpful? 4
      , hyderabad
      Reviewed on Jul 20, 2019
    • ICICI Bank Fixed Deposit
      "Good investment for future"
      0.5 4.0/5 "Great!"
      I opened fixed deposit with ICICI it gives tax benefits upto 80 c section, I invest Rs. 50,000 as a one time investment it has the term of five years. The online banking is good to deposit the money to take the liquidity, I have option to track the FD details also netbanking.
      Was this review helpful? 6
      , bangalore
      Reviewed on Jul 19, 2019
    • Union Bank of India Fixed Deposit
      "Its Recommendable "
      0.5 5.0/5 "Blown Away!"
      I have fixed deposit with Union Bank of India, I opt for one year fixed deposit , they are providing 8.60% of interest for per annum. I got the profit around Rs. 8000 for the amount invested amount of around Rs. 1.60 lakh, I would recommend this service. They do have option to deposit the amount through online.
      Was this review helpful? 2
      , hyderabad
      Reviewed on Jul 18, 2019
    • Citibank Fixed Deposit
      "GOOD"
      0.5 5.0/5 "Blown Away!"
      I have withdrawn the money so that there was a quick response also i got the money within few minutes. I used the account for more than 2 years. To open the account it is easy i have done through the online. The rate of interest was 6% per annum.
      Was this review helpful? 3
      , hyderabad
      Reviewed on Jul 18, 2019
    • SBI Fixed Deposit
      "GOOD"
      0.5 3.0/5 "Satisfactory"
      I am not much satisfied with the fixed deposit with STATE BANK OF INDIA. I am using from last few years and there is a good online banking also the service from the customer support is good added on that the overall service with them was good.
      Was this review helpful? 5
      , kolkata
      Reviewed on Jul 17, 2019
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