Getting good returns on the foreign currency earned abroad is one of the aspects that FCNR Deposit for NRIs can help with. The FCNR Deposits are underrated when it comes to investing foreign currency by an NRI. Amidst the plethora of options available for NRI Investment in India, the benefits of FCNR Deposit goes unnoticed. In this article, we will explore the benefits of the FCNR Deposit for NRIs and understand how it is better than most of the investment options out there comparing it with the likes of NRE FD.
In this Article, we will cover:
- What is FCNR Deposit?
- Overview of the FCNR Deposit for NRIs
- Why should NRIs have foreign currency deposits in India?
- Repatriation of FCNR Deposit for NRIs
- FCNR Deposit Interest Rates
- How to open an FCNR Deposit Account?
- FCNR Deposit Calculator
- FCNR VS NRE FD
- Is FCNR a good investment?
What is FCNR Deposit?
A FCNR or Foreign Currency Non Resident Account is a deposit only account also commonly referred as a FCNR Deposit. This account can be operated by NRIs and OCIs with the benefit of depositing their foreign currency in India for a fixed tenure ranging from 1 year to 5 years and earning tax-free interest up to 3.22%* in foreign currency.
History: The FCNR Account scheme was introduced on 15th May, 1993.
Overview of the FCNR Deposit for NRIs
|Factors to consider||Foreign Currency Non Resident (FCNR) Account|
|Purpose||Foreign Currency Investment in India|
|Currency||USD, GBP, EUR, JPY, CAD, AUD, SGD, HKD and CHF|
|Tenure of Deposits||1 year to 5 years|
|Interest Rate||Up to 3.22%*|
|Joint Account Holding||NRIs as well as Residents|
|Nomination||NRIs as well as Residents|
|Repatriation(transfer of money from Indian bank account to foreign bank account)||Both Principal and Interest completely repatriable|
|Tax Deductions||No tax on interest earned|
Other Key Features:
- Post return to India, FCNR Deposits can be held till maturity.
- Post maturity, FCNR Deposits can be converted into Resident Foreign Currency (RFC) Accounts. All freely convertible currencies are allowed for RFC Accounts such as US Dollar, British Pound, Euro, Yen, etc.
- There are no currency fluctuation risks.
- There are no exchange rates and associated fees as both the money deposited and withdrawn are in foreign currency chosen by you.
- You can avail loans against FCNR Deposits in India for personal or business use. The loan amount can be in both INR or foreign currency.
A very intriguing question! Why invest your foreign currency in India? Well, the answer is very simple. Returns! Investing your foreign currency in India will fetch you a much better return compared to investing the same amount in the country of your residence. For example, the national average interest rate on savings accounts in the USA stands at 0.05% APY whereas you can earn up to a 3.22%* return on dollar deposits that will be tax-free in India.
Repatriation of FCNR Deposit for NRIs
Both the principal amount and the interest earned on the FCNR Deposit for NRIs is completely and freely repatriable which means that you can send the entire money lying in your account to your overseas bank accounts without any limit and the interest earned is tax-free in India so you don’t pay a single penny to the Indian Government. Sweet? Isn’t it?
The nomination facility helps you in transferring the entire amount in your account to the nominee’s account with no charges or tax post the demise of the primary account holder.
FCNR Deposit Interest Rates
You can earn up to 3.22%* tax-free interest on your foreign currency invested in India with FCNR Deposits. The interest rates vary with the tenure of deposits. Here is the list of the ongoing interest rates on FCNR Deposits in top banks in India.
Latest FCNR Deposit Interest Rates 2020 (USD)
|Banks||Interest Rate (>1 year <2 year)||Maximum Interest Rate and Tenure|
|Federal||0.82%*||0.96%* (5 years)|
|SBM||2.21%*||2.91%* (5 years)|
|SBI||0.72%*||0.91%* (5 years)|
|Axis Bank||0.50%*||0.60%* (5 years)|
|ICICI||0.47%*||0.66%* (5 years)|
|Kotak||0.20%*||0.20%* (>1 year <2 years)|
|IDFC||2.21%*||3.22%* (>4 years <5 years)|
|IndusInd||2.21%*||2.24%* (>2 years <3 years)|
|DCB Bank||1.75%*||1.75%* ((>1 year <2 years)|
|DBS Bank||0.47%*||0.66%* (5 years)|
Note: The FCNR Deposit Interest Rates update every month. We track the updates and present them for you here: Latest FCNR Deposit Interest Rates 2020
How to open an FCNR Deposit Account?
Opening an FCNR Deposit is pretty seamless and convenient and can be done at the comfort of your homes. SBNRI is pioneering the facility of hassle-free NRI Bank Account Opening where you just need to upload the required documents and fill the online form and the attested originals will be picked up from your address abroad.
To take a sneak peek into the FCNR account opening process at the top banks in India, head over to our grid on How to open an NRI Bank Account.
FCNR Deposit Calculator
Calculating your returns on the FCNR Deposits involve exploring the ongoing interest rates on your preferred foreign currency. You can contact the certified investment experts at SBNRI to guide you through the process of selecting the best time to invest and calculating your returns.
Just click on the button at the end of the article to instantly connect with one of our investment experts.
A much asked question is what is better? NRE FD or FCNR Deposits? The basic difference to look for here is the currency in which these deposits are maintained. The NRE Account is used to park the funds generated abroad by an NRI but the amount is converted to INR and the account is maintained in INR whereas FCNR Deposits are maintained in foreign currency that eliminates the exchange rate fees and currency fluctuation risks.
Having said that, the interest rate on NRE FDs go as high as 7.50%* while you can get up to a 3.22%* interest rate on FCNR Deposits. Both the deposits provide the benefit of tax-free interest and completely free repatriation.
There are multiple factors that need to be weighed in to conclude which one of these two options is the best for you as per your needs. So here’s a little table of comparison:
FCNR Deposits VS NRE FD
|Factors to consider||Non Resident External (NRE) Account||Foreign Currency Non Resident (FCNR) Account|
|Purpose||For income earned outside India||Foreign Currency Investment in India|
|Currency||INR||USD, GBP, EUR, JPY, CAD, AUD, SGD, HKD and CHF|
|Tenure of Deposits||1 year to 10 years||1 year to 5 years|
|Interest Rate||Up to 7.50%*||Up to 3.22%*|
|Joint Account Holding||NRIs as well as Residents||NRIs as well as Residents|
|Nomination||NRIs as well as Residents||NRIs as well as Residents|
|Repatriation(transfer of money from Indian bank account to foreign bank account)||Both Principal (money invested initially) and Interest completely repatriable||Both Principal and Interest completely repatriable|
|Tax Deductions||No tax||No tax|
Comparing the two prime investment options: NRE FD and FCNR Deposit it can be concluded that the returns in the longer run will coincide at some point. The Indian Rupee depreciation impact on NRE FD will be taken care of by the interest rate differential on the FCNR Deposits. The game here is to understand which route to choose and weigh in the benefits against the drawbacks.
The best route will be opting FCNR Deposits for diversification and capitalize on any significant appreciation of the Indian Rupee in the short term. Click on the button below to connect with our investment expert and create the perfect plan for investing your foreign currency in India and garner the benefits out of it. Also, visit our blog and Youtube Channel for more details.
Axis Bank offers up tp 0.60%* interest rate on FCNR Deposits. Check out the latest FCNR Deposit Interest Rates for top banks in India and find the best bank as per your needs.
ICICI Bank offers up tp 0.66%* interest rate on FCNR Deposits. Check out the latest FCNR Deposit Interest Rates for top banks in India and find the best bank as per your needs.
SBI offers up tp 0.91%* interest rate on FCNR Deposits. Check out the latest FCNR Deposit Interest Rates for top banks in India and find the best bank as per your needs.
The FCNR deposits are one of the safest and most secure investment options in India for NRIs. These deposits are also free from exchange rate risks.
Yes. FCNR Deposits are completely and freely repatriable which means that you can send both the principal amount as well as the interest earned to your overseas bank account without any limit and taxes.