Foreign Currency Non-Resident [FCNR]

By : Neha Dhyani

Updated : Mar 8, 2023, 17:25

Non-residents of India earning a dual income may want to deposit money in Indian banks. These individuals have three types of accounts to choose from NRO, NRE, and FCNR.

FCNR - Overview

FCNR stands for Foreign Currency Non-Resident account and is an excellent way for NRIs to make an investment without any risks associated with foreign exchange. These accounts are not savings but fixed deposit accounts for foreign currencies.

Non-Resident Indians and Persons of Indian Origin can open an FCNR account to save their earnings from the foreign country in the form of term deposits. An FCNR account holder can make deposits in a number of currencies including AUD, USD, CAD, GBP, and more. Such accounts have multiple benefits for non-resident Indians.

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FCNR What You Should Know?

Foreign Currency Non-Resident (FCNR) is a scheme introduced by the Indian government to help NRIs transfer funds into Indian banks. While the NRE and NRO accounts allow managing the funds in Indian rupees, the FCNR account supports foreign currencies for flexibility.

Before 2011, FCNR allowed deposits in six currencies. In 2011, the Reserve Bank of India announced that banks could accept deposits for FCNR accounts in any currency that can be freely converted. These include Swedish Krona, Swiss Frank, and many others.

It is also possible to transfer from an NRE account. One can open an account using traveller cheques or foreign currency notes during an India visit. You can deposit for a term ranging from one year to five years.

Interest Rates for FCNR Accounts

The interest rates for FCNR accounts vary between banks as well as terms and currencies. The interest is tax-free in India and your principal amount, as well as interest, is repatriable. The RBI even permits opening the account jointly with other NRIs or Indian residents who are relatives. The resident relative is permitted to operate the account under the power of the attorney holder.

One can open an FCNR account from a foreign country by applying to the bank with the necessary documents. The funds in the account must come only from overseas with a facility to transfer money directly from your overseas bank account.

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FAQs on Foreign Currency Non-Resident [FCNR]

Q.1. Does FCNR offer a nomination facility?

Yes, an FCNR account can have a nominee. It can be either a resident Indian or NRI.

Q.2. Can you get a loan against the FCNR deposit?

It is possible to get a loan in Indian and foreign currency against the security of the term deposit.

Q.3. How is FCNR different from NRE and NRO?

The key difference is that FCNR allows depositing and withdrawing foreign currencies and has no foreign exchange risk.

Q.4. Can you withdraw a premature FCNR deposit?

Yes, the FCNR deposit can be withdrawn before the completion of the term but is subject to an interest penalty of 1%.