What is FCNR Account in India: 5 Things You Should Know

Are you an NRI (Non-Resident Indian) or PIO (Person of Indian Origin) worried about the volatility of INR? Want to maintain a Fixed Deposit (FD) account in India but in a foreign currency? How about earning interest as high as what resident Indians earn from bank FDs? An FCNR (Foreign Currency Non-Resident) account is what you need. 

Take a look at what is account is, how it works, and more-

 

1. What is an FCNR Account?

An FCNR account is a type of term deposit account, just like bank FD. But unlike standard FDs, NRIs and PIOs are allowed to open an FCNR account in a few permitted foreign currencies. These currencies include USD, GBP, EUR, SGD, HKD, JPY, AUD, CAD, and more.

Just like a bank FD, an FCNR account is booked for a fixed duration and earns a fixed rate of interest. This could be an excellent option for NRIs wanting to earn returns from their idle foreign funds without converting them into INR.  

 

2. What is the Interest Rate and Tenure of FCNR Accounts?

There are multiple factors the determine the interest rate of FCNR accounts. For instance, the rate varies between banks. Even the foreign currency you deposit and the investment tenure you select impacts the interest rate offered by the bank. 

FCNR accounts can be booked for a tenure ranging from 1 year to 5 years. You can either receive the interest income on maturity or also select half-yearly or yearly interest payments. 

 

3. How are FCNR Accounts Taxed?

One of the top reasons why NRIs prefer opening FCNR accounts is their tax treatment. The interest that your FCNR account earns is tax-free in India. Neither the bank will deduct any tax while crediting your interest income, nor will you be required to pay taxes at the time of withdrawal. 

Moreover, FCNR accounts are fully repatriable. This means that you are free to repatriate the principal amount as well as the interest earned to your current country of residence.

 

4. Can You Get a Loan Against FCNR?

Most banks now offer loans against FDs. To ensure that even NRIs can take advantage of this facility, some of the banks now also offer loan facilities on their FCNR deposits. In case of a financial emergency, you can borrow as much as 85% of your FCNR deposit amount as a loan. 

The loan against deposit feature eliminates the need for you to break your FCNR deposit and risk losing the interest income.

 

5. How Can You Open an FCNR Account?

The application process will also depend on the bank you select. But some of the top banks now allow you to open an FCNR account in India through their online banking portal, mobile app, and even through phone banking. You can even use the wire transfer service for your account deposit. 

You can also consider a reputed bank with multiple branches in your current country of residence. This will allow you to open the FCNR account by visiting the nearest branch. 

 

Should You Consider Opening an FCNR Account?

If you are looking for a safe way to earn higher yields on your idle foreign income without converting it to INR, you should definitely consider opening an FCNR account. With features like tax-free returns, fully repatriable, flexible tenure, and loan against the deposit, you are sure to experience utmost convenience while also receiving maximum value on your hard-earned foreign income.

Look for a reputed Indian bank offering highly competitive interest rates on FCNR accounts to book your account as soon as possible. 

 

 

Disclaimer: “The contents of this article is meant merely for informational purpose. Any reliance placed on such information is therefore strictly at one’s own risk.”