Are you living overseas and looking to invest in India without having to go through the exchange rate fluctuations? The FCNR bank account could be the perfect option for you. Find out more about the FCNR deposits in this post.
A Foreign Currency Non-Resident Bank account (FCNR) is a fixed-term deposit account opened for depositing income accrued and earned outside India. The account holder can deposit their earnings in the same currency as their resident nation in a foreign country without being subject to exchange rate fluctuations. These accounts can be held by;
- PIO – Person of Indian Origin
- NRI – Non-Resident Indian
- OCI Cardholder – Overseas Citizenship of India cardholder
Features of FCNR Bank Account
- FCNR bank account can be maintained in 9 different currencies, such as USD, Yen, Pound, CAD, British Pound, Euro, and more.
- FCNR accounts hold term deposits with a period ranging from 1 year to 5 years.
- The funds held in FCNR bank deposit accounts are fully repatriable and can be done either via internet banking or through a branch.
Benefits of FCNR
- Overdraft facility: Some banks provide an overdraft facility to an FCNR account holder against the term deposits held. The overdraft could be for up to 85% of the deposits depending on the currency of the account.
- No Currency Fluctuations: Since the deposits are held in a foreign currency, they are free from any currency fluctuations.
- Non-Taxable Earnings: Interest earned in FCNR bank accounts are exempt from tax in India.
Opening an FCNR Bank Account?
Opening an FCNR bank account is completely hassle-free and can be opened from abroad. All you need to do is submit or upload (if applying online) these below-mentioned documents to the Bank along with the application form.
- A valid copy of attested passport and visa
- Passport size photos
- Proof of foreign residence
- Any other document as required by Bank
Along with these documents you will have to choose the currency of your choice and make the remittance via any of the following mediums:
- Wire transfer or cheque deposit from your overseas bank account
- From another NRE or an FCNR bank account
- Any proceeds from a Travelers Cheque.
The FCNR deposits can be held individually or jointly with another NRI. However, close resident-Indian relatives of the NRIs and PIOs can be a joint holder of the account on former or survivor basis.
Closure of FCNR Accounts
- Renewability: You can either set the renewability of the deposits as automatic on completion of the term or give maturity instructions to the Bank. In case you don’t provide maturity instructions, it will be renewed automatically until you withdraw.
- Closure of Account: If you wish to close your FCNR Deposit account, you will have to mention your bank details to the Bank. Do note that the proceeds from FCNR bank account cannot be transferred to any third-party accounts. You should be the account holder where you wish to transfer the funds.
- Premature Withdrawal: While you can withdraw the deposits held in FCNR bank account anytime, you will not earn any interest if the deposit is held for less than a year. There will be no penalty If the withdrawal is made post one year.
As an NRI, having to circumvent the exchange rate fluctuations is a tough task while investing in India. This is where an FCNR Bank account comes in handy as it allows you a clear pathway to deposit and maintain funds into India in a foreign currency without having to undergo loss due to exchange rate. Choose a credible bank that offers attractive interest rates while opening a new FCNR bank account.
