The full form of FCNR is Foreign Currency Non-Resident Account, also known as FCNR(B) account. Non-Resident Indians who wish to open a fixed deposit account in India to save money earned overseas in foreign currency can open an FCNR (B) account. Recently leading Indian banks have hiked FCNR FD rates significantly on US dollar category deposits after the Reserve Bank of India (RBI) eased the interest cap till Oct 31, 2022. Here you will learn about the FCNR account in detail.
You can book FCNR fixed deposit online by clicking the link below:
Table of content
- What is FCNR account?
- Benefits of FCNR account
- FCNR deposit rates
- Eligibility criteria for FCNR FD
- How to open a FCNR FD account
- How to deposit money in your FCNR account
- FCNR (B) deposit premature withdrawals
- Why choose FCNR fixed deposits
- FAQs
What is FCNR account?
An FCNR account is a foreign currency denominated fixed deposit account opened by non-resident Indians and overseas citizens of India (OCIs) to manage their savings in a foreign currency. In other words, NRIs can transfer their foreign earnings to a fixed deposit account in India without converting the currency into INR. The principal and interest earned thereon are maintained in one of the acceptable foreign currencies. FCNR deposits are one of the best NRI investments in India. Mostly Indian banks book FCNR(B) deposits in the following currencies.
- US Dollars (USD)
- Pounds Sterling (GBP)
- Euro (EUR)
- Japanese Yen (JPY)
- Australian Dollars (AUD)
- Canadian Dollars (CAD)
- Singapore Dollar (SGD)
FCNR deposits are a great investment option for NRIs who wish to retain their savings in foreign currency. With higher interest rates, NRIs can earn good returns on FCNR accounts.
Benefits of FCNR account
Some of the key benefits of FCNR fixed deposit accounts are as follows:
- Since your money is held in foreign denomination, FCNR accounts are protected against forex rate risks (change in the value of rupee against the currency in which the account is denominated). In other words, the principal and the interest earned thereon are transferred in the currency in which the account is maintained without any loss of exchange.
- Indian banks have hiked FCNR rates significantly after the RBI removed the ceiling on interest rates.
- Interest earned on FCNR fixed deposits are tax free in India.
- NRIs can open an FCNR FD account in several major world currencies including, US Dollar, Pound Sterling, Euro, CAD, AUD, Yen, etc.
- In the case of an FCNR account, both principal and interest are fully and freely repatriable. Hence, NRIs can transfer the principal amount and interest earned to a bank account in their country of residence.
- You can open an FCNR fixed deposit account for a period between 1 year and 5 years.
- FCNR account holders can avail rupee loans against funds held in the FCNR account. Foreign currency loans outside India are also permitted to the account holders.
FCNR deposit rates
After the Reserve Bank of India removed the ceiling on interest rates on incremental FCNR and NRE deposits, banks have raised FCNR deposit rates up to 4.52%. FCNR deposit rates by leading Indian banks, including SBI FCNR rates, ICICI FCNR rates, HDFC FCNR rates, etc. are listed in the table below:
| Banks/ Currency | SBI | HDFC Bank | ICICI Bank | Axis Bank | Kotak Mahindra | SBM |
|---|---|---|---|---|---|---|
| USD | 4.05 – 5.50% | 4.10 – 5.55% | 3.50 – 5.55% | 4.10%- 5.60% | 3.50 – 5.55% | 4.4 – 6.1% |
| GBP | 2.35 – 4.75% | 5.50% | 4.75 – 5.50% | 2.45- 4.00% | 4.85 – 5.95% | 3.3- 4.55% |
| EUR | 1.50% | 3.30% | 0.01- 2.90% | 2.55 – 3.70% | 1.3- 1.75% | |
| CAD | 3.60 – 4.30% | 3.95 – 4.60% | 3.75 – 4.75% | 3.30- 4.20% | – | |
| AUD | 3.00 – 3.60% | 4.20 – 4.35% | 3.75 – 4.25% | 3.70- 4.05% | 3.80 – 4.75% | – |
Note:
- Different foreign currencies carry different FCNR rates
- FCNR rates are subject to periodic changes
- Usually banks have a lock-in period of one year
- In case of premature withdrawal, interest is generally paid on deposits withdrawn after completion of one year
Eligibility criteria for FCNR FD
You need to meet the following criteria for opening an FCNR account:
- A non-resident Indian and overseas citizen of India or person of Indian origin is eligible for opening an FCNR account.
- An FCNR account can be held jointly with other NRIs.
- The minimum deposit amount varies from bank to bank and currency to currency.
- The minimum FCNR tenure is 1 year to earn interest.
Documents required to open FCNR FD account
In order to open an FCNR B account, applicants also need to submit the following documents:
- Filled and attested FCNR account opening form
- Valid Indian passport with visa stamp on it
- For OCIs/ PIOs
- OCI or PIO card
- Foreign passport
- Passport size photographs
- Address proof (of the country the individual is currently residing in)
- PAN card or Form 60
- NRI status proof
- Income proof
- Any other documents as required by the respective bank
How to open a FCNR FD account
You can open an FCNR fixed deposit account online through internet banking and mobile banking, or if possible by visiting the nearest branch in any of the convertible foreign currencies.
Alternatively, you can book FCNR FD online through SBNRI.
How to deposit money in your FCNR account
Eligible applicants can transfer funds into their FCNR account from their foreign currency account outside India or NRE account in India. If you transfer money from the NRE account, the fund will be converted into the foreign currency at current exchange rates and then deposited in foreign currency equivalent.
Remember that you can’t deposit money in an FCNR account from a third-party account.
FCNR (B) deposit premature withdrawals
If you choose to close close your FCNR (B) account before the due date, the following clauses (may vary from bank to bank) would be applicable:
- Usually, banks don’t pay interest on FCNR deposits closed before completion of 1 year.
- Charges will be applicable on fixed deposits closed before the due date, depending upon the bank.
- On premature withdrawal after 1 year, interest will be calculated as on the date of deposit.
Why choose FCNR fixed deposits
Banks in India are offering much higher interest rates on FCNR deposits when compared to rates on deposits in other countries. It is a better opportunity for NRIs/ OCIs to generate higher returns in India than what you can generate outside, say in the USA or Europe.
For example, the annual percentage yield (APY) of CDs (certificates of deposits) of the top five banks including JP Morgan Chase, Bank of America, Wells Fargo and U.S. Bancorp, currently ranges from 0.02% – 1.01% for 3-year deposits. A certificate of deposit with a 12-month maturity period offers rates at 0.02%-0.10%.
Whereas FCNR(B) deposits locked till 4 November having 12-month and 36-month maturity will offer a yield of 2.5-4% and 2.88-3.8%, respectively.
SBNRI is an online one-stop platform for expert services and advisory on all major NRI specific aspects including NRI FD schemes.
To get end to end assistance with booking of FCNR(B) Fixed Deposits, you can connect with our expert using the button at the end of the article. You can also browse through the NRI Account Opening grid that we have prepared specially for NRIs and get expert advisory and assistance seamlessly and complete the entire process at the comfort of your homes. Also, visit our blog and YouTube Channel for more details.
FAQs
No charges will be applicable. However, wherever currency conversion is required, banks may levy the service tax as applicable as per the Service Tax Rules (1994).
Yes, principal amount and interest earned thereon are fully repatriable.
Beneficiary and creditor must be the same person to fund an FCNR deposit account.
No, interest earned from FCNR deposits is exempt from tax in India?
You can open an FCNR deposit for a tenure ranging from 1 year to 5 years.
Yes, you can have a nominee for FCNR deposit.
You can close the deposit before the due date. However, there will be no interest on FCNR deposits closed before 1 year. After one year, the interest will be paid on the date of deposit.
FCNR FD proceeds are transferred to an account where the FCNR FD holder is a primary applicant.
Yes, banks offer loans against FCNR deposits, generally up to 80% of the deposit amount.
