Meenal Grover asked on 18/03/2020

Can I invest foreign currency in India?

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SBNRI Team
answered on 18/03/2020

Yes. You can invest foreign currency in India by opening an FCNR or Foreign Currency Non-Resident Deposit Account (NRI fixed deposit accounts for depositing money earned abroad in foreign currency for a fixed period ranging from 1 to 5 years with tax-free interest) with banks facilitating investments in all the freely tradable global currencies.

 

Foreign Currency investment in India

 

You can also invest foreign currency in India through an NRE Account but the account is maintained in INR whereas FCNR deposits are maintained in the foreign currency you have chosen for deposits.

 

Invest Foreign Currency in India

To know more about the different types of NRI Banking Accounts that you can use and which ones are suitable for foreign currency investment in India, refer to the table below:

 

Types of NRI Accounts

Factors to consider Non Resident External (NRE) Account Non Resident Ordinary (NRO) Account Foreign Currency Non Resident (FCNR) Account
Purpose

For income earned outside India

For income earned from India (pension, rent etc.) 

Foreign Currency Investment in India

Currency

INR

INR

USD, GBP, EUR, JPY, CAD, AUD, SGD, HKD and CHF

Tenure of Deposits

1 year to 10 years

7 days to 10 years

1 year to 5 years

Interest

Up to 7.95%*

Up to 7.30%*

Up to 3.05%*

Repatriation

(transfer of money from Indian bank account to foreign bank account) 

Both Principal (money invested initially) and Interest completely repatriable Up to a maximum of 1 million USD per financial year Both Principal and Interest completely repatriable
Tax Deductions

No tax

Tax on Interest earned (not on principal amount): 30% tax + surcharge + education cess will be deducted at the source of interest earned in India

No tax

 

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