If you are a Non-Resident Indian interested in maintaining a fixed deposit account in India.
In that case, you should opt for an FCNR account.
This type of bank account allows you to save money earned overseas in Foreign Currency.
Most banks hold Foreign Currency Non-Resident Account deposits in the following currencies:
- US Dollars
- Pounds Sterling
- Japanese Yen
- Australian Dollars
- Canadian Dollars
Non-Resident Indians looking to retain their income in foreign currency while simultaneously earning good returns should consider this account as it is a great investment option.
Another benefit is that your money will be held in foreign currencies, which allows you to avoid the risk of conversion loss and exchange rate fluctuations.
This results in Non-Resident Indians earning higher, risk-free returns and allows you to store your money safely if you are still deciding between whether to save or invest your income.
What are the features of an FCNR account?
FCNR accounts incorporate a few rules and features that help make them unique in the global financial landscape.
The ability for non-resident Indians to save money in a foreign currency is a boon for individuals who work or live in strong-currency economies due to favorable interest and exchange rates.
Take a look at some more features of a FCNR account.
1. Foreign Currency Denomination
Foreign Currency Non-Resident accounts hold funds in foreign currency denominations which means that the funds deposited will not be converted to Indian Rupees and will continue only to be held in the Non-Resident Indian’s choice of foreign currency.
This is a great option for those who live in countries like the UK, Canada, Australia, and the US, where interest rates are comparatively lower.
2. Transferability of Funds
With an FCNR account, you can easily transfer your funds directly from your foreign bank account or through a wire transfer or personal cheques.
Moreover, if you have an existing Non-Resident External Account, you can transfer funds from there or any other FCNR account.
3. Term Deposit Accounts
Foreign Currency Non-Resident accounts are term deposit accounts with a minimum tenure of one year and a maximum of five years.
With a term deposit, you can lock away a specific amount of money for an agreed period of time.
This makes FCNR accounts unique as they are now offering deposits much different from the usual accounts offered by Indian banks to residents.
This means that you will not be able to access the funds deposited until the period of time agreed upon is completed.
In return, you will get a guaranteed rate of interest for the term you select, so you will be aware of the amount of return you’ll generate from your money.
However, Non-Resident Indians will not receive any interest in case of premature withdrawals within one year of deposit.
4. Full Repatriability of Funds
If you hold a Foreign Currency Non-Resident account, you can repatriate both the income earned abroad, which is deposited, and the interest earned back home in India.
5. Non-Taxable Interest
Another major benefit of opening a Foreign Currency Non-Resident account is that the interest earned on the income deposited in these accounts is not subject to taxation according to the Indian government legislation.
6. Loan & Overdraft Eligibility
Foreign Currency Non-Resident account deposits make you eligible for loans in the Indian Rupee denomination.
These loans can be up to 85% of your deposit at an attractive interest rate.
However, these loans are given at a maximum of Rs. 500 lakh (INR).
You can also obtain an overdraft facility over your FCNR term deposit account, which offers you more flexibility when managing your finances.
You can obtain these loans against your FCNR deposit from anywhere in the world.
However, you should always keep in mind that some banks may have different requirements regarding repaying these loans.
Therefore, make sure to understand those requirements carefully before making your decision.
7. Joint Accounts
You can open a Foreign Currency Non-Resident account with two or more joint Non-Resident Indian account holders.
Additionally, if you have an existing Non-Resident External account, you can open a Foreign Currency Non-Resident account by simply transferring funds from your existing NRE account.
What documents are required to open an FCNR account?
The following documents are required along with the basic criteria of having Non-Resident Indian, Person of Indian Origin, or Overseas Citizen of India status:
- A copy of a valid passport and recent passport size colored photograph
- Proof of address in India
- Proof of address in the applicant’s country of residence
- Proof of NRI, POI, or OCI status (through a copy of a residency permit or visa document)
- A valid PIO/OCI card
Which banks offer FCNR accounts in India?
It is extremely important to invest and save your money with a trusted bank with global recognition, especially regarding fixed deposit accounts where you cannot withdraw your money whenever you want.
The leading banks in India which offer FCNR accounts include the following:
- ICICI Bank
- HDFC Bank
- IBI Bank
- Axis Bank
- YES Bank
- State Bank of India (SBI)
- Punjab National Bank
Opening a Foreign Currency Non-Resident Indian bank account is a great way to earn higher returns without taxing foreign currency deposits.
Indians living abroad who open an FCNR account will avoid losing money from foreign currency exchange risk and conversion loss, ensuring that they benefit from high and guaranteed returns on their deposit.
Lastly, choosing to open an FCNR account is a great option for you if you are still deciding between saving or investing your earnings in India or abroad as you again avoid losing money from exchange rate fluctuations followed by conversion loss.