Understanding FCNR Deposits: An Attractive Option for NRIs

The FCNR or Foreign Currency Non-Resident Account is exclusively available for Non-Resident Indians (NRIs) to maintain fixed deposits in Indian banks and earn returns over its tenure. This facility is accessible to NRIs holding Indian passports and OCI cardholders.

NRIs can maintain an FCNR deposit in foreign currency rather than converting it into INR. This feature shields them from currency fluctuations, and they can withdraw the interest in their overseas currency.

 Salient Features of FCNR Deposit

 The following features and benefits make the FCNR deposit account an attractive option for NRIs.

 1. High-Interest Rates 

It is no secret that countries like the USA, UK or Canada (the top 3 NRI nations) offer negligible returns on fixed and recurring deposits. This makes them a lesser sought-after investment avenue, despite being low-risk. Such is not the case in India, given that Indian fixed deposits offer higher returns.

Today NRIs can open an FCNR deposit with leading banks, such as the IndusInd Bank, which offers a substantial rate of interest.

  2. Tax Exempt

 Not only does an FCNR deposit earn you attractive interest returns, but these returns are also entirely exempt from any taxation in India. The best part? To qualify as an NRI, you must spend 180 days outside of India.

 Anybody befitting this qualification can open an FCNR deposit without paying any tax on both the principal as well as interest components.

 3. Holds Funds in 6 Currencies

 As an NRI, you could be settled anywhere in the world. But that should not impact your chances of getting higher returns by investing in an FCNR deposit. Many banks today allow NRIs to hold their currency in any one of the following denominations.

 

●        USD

●        GBP

●        EUR

●        AUD

●        CAD

●        JPY

  4. Flexible Tenures

NRIs can open and operate an FCNR deposit account within a diverse range of tenures. The minimum tenure NRIs can open this account for is 1 year, while the maximum duration is 5 years. They can prematurely withdraw funds before the first year is over but are not liable to receive any interest on the sum withdrawn.

 However, any withdrawal made after one year of the deposit will pay NRIs interests as per the compounded calculation.

 5. Fully Repatriable  

NRIs can fully and freely repatriate, or transfer back, the entire balance of their FCNR account. This includes both the principal as well as the interest earned. They can do this without paying any tax, and in the same currency, they opened their account.

Parting Thoughts

Needless to say, if you want to earn steady and guaranteed returns without losing any money through currency conversion, FCNR deposits are an excellent financial instrument.

That said, remember to open an FCNR deposit with a reputed bank that provides high-interest rates. Compare the interest rate, terms, and customer service offered by various banks before opening a deposit account with one. This way, you can be assured you will choose the offer that is best for you.