FCNR Fixed Deposit Account - Features & Benefits

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What is FCNR (B) Fixed Deposit Account?

FCNR (B) stands for Foreign Currency Non-Resident (Bank) Fixed Deposit Account. It is offered by Indian banks to non-resident Indians (NRIs) and persons of Indian origin (PIOs). The account allows you to deposit and maintain your foreign earnings in foreign currencies such as US Dollar (USD), British Pound (GBP), and Euro (EUR) among others.

In the case of FCNR (B) accounts, the principal and interest are freely repatriable, meaning they can be transferred back to the account holder’s home country without any restrictions. However, these accounts are subject to specific regulations and terms and the interest rates can vary depending on the currency and the tenure.

Learn more about these perks, how to apply for an FCNR account, and other aspects related to it in the following sections:

Features of an FCNR Account

Flexibility

The deposited funds can be of different currencies and will not be converted into Indian Rupees. This enables flexibility in dealings as the deposits can be made as per investors’ preferred choice of currency, under RBI’s list of approved ones.

Taxation

No taxes are applicable on the returns earned in FCNR accounts according to Indian laws.

Deposit Tenor

Since this is a term account, rather than a savings account, it features a minimum tenor of 1 year and a maximum of 5 years. However, if the residency status of an NRI changes during this period, they will be allowed to keep their FCNR accounts open up to the date of maturity.

In addition, this will continue to remain at the previously agreed-upon interest rate.

Nomination Facility

NRIs can make use of the provided nomination facility of FCNR accounts. Here, the nominee can either be an NRI or an Indian resident.

Joint Account Holding

An FCNR account can also be opened with two or more joint NRI account holders.

Benefits of an FCNR Account

FCNR account holders can receive loans from banks by pledging their stored funds as collateral
Interest earned on FCNR accounts, including the principal amount, are transferable
Since the funds are held in foreign currency, there are no foreign exchange rate risks as they are transferred in the same currency in which they had been maintained
Any maturity proceeds earned in an FCNR account can be used to repay or settle foreign currency loans availed beyond India
Most FCNR accounts do not feature a minimum deposit amount

Documents required to open an FCNR Account

Besides passing the eligibility criteria of being an NRI or a Person of Indian Origin (PIO), you must provide the following documents to open an FCNR account:

Valid passport with a recent passport-size colour photograph of yourself

Work/Residence permit or Residence/Employment Visa to confirm your NRI status
Proof of address in your resident country
Copy of your Form 60 or PAN card
NRI seafarers are required to produce a copy of their Continuous Discharge Certificate (CDC) with a disembarkment stamp on its last page.
NRI seafarers may also be asked to provide a Foreign Exchange Management Act (FEMA) declaration
PIOs must provide a valid PIO/OCI card or a related proof of their PIO status, along with a completed and signed PIO declaration

How to open an FCNR account

In order to open an FCNR account, you will have to provide certain documents to your selected bank or NBFC. These include visa, passport, KYC, and a Foreign Account Tax Compliance Act (FATCA) declaration, along with address and identity proofs. You may also be required to submit your income documents as well.

Following this, you will be provided with your account details and be intimated about any other follow-up actions.

Difference between NRE, NRO and FCNR Accounts

NRIs can open three types of different accounts to store their funds in, namely NRO, NRE and FCNR accounts. These can be opened with most authorised banks and come with their own set of features. The differences between them are as follows:

Particulars	NRO	NRE	FCNR
Full Form	Non-Resident Ordinary account	Non-Resident External account	Foreign Currency Non-Resident account
Function	Allows you to deposit income earned in India	Allows you to deposit income earned abroad	Allows you to deposit foreign currency earnings in Indian accounts
Currency Involved	INR	Foreign currencies	RBI-approved foreign currencies
Foreign Exchange Risks	No risks involved	Subject to such risks	No risks involved
Withdrawal Currency	INR	INR	Deposited foreign currency
Taxation	Applicable taxes up to 30%	Non-taxable	Non-taxable
Joint Account Opening with Indians	Allowed	Not allowed	Not allowed
Loan Against Deposits	Available in INR	Available in INR	Available in foreign currencies with some restrictions

Transferring Funds to an FCNR Account

You will be able to transfer funds from your NRE account based in India or any other foreign currency account outside India, to your FCNR account. During the process, this amount will be converted into foreign currency present in the FCNR account at the current exchange rates and deposited accordingly.

However, it is important to remember that you will not be able to fund your FCNR account via a third-party account. With this, you may now have a much better idea about FCNR accounts, and the various concepts linked to it.

This is one of the best ways to go about investing your funds as an NRI due to its guaranteed returns in the applicable foreign currency.

Disclaimer

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