An NRI or Non-Resident Indian is an Indian citizen living in a foreign country for a defined period as per the NRI eligibility condition. The Government of India has made many provisions for NRIs so that they are also able to invest their money in their home country.
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If an NRI is willing to opt for the FCNR (B) account, here is the detailed information as to how the Foreign Currency Non-Resident Account works.
What is an FCNR (B) Account?
In simple words, a Foreign Currency Non-Resident Bank Account is a kind of Fixed Deposit Account for NRIs. An FCNR account is offered only to those NRIs who have either an NRE or an NRO account and is considered a lucrative option as it allures foreign remittance. One of the attractive features of an FCNR account is that the money deposited can be in permissible foreign currencies and the interest rate completely depends on the currency type deposited.
Permissible Foreign Currencies
Following are the foreign currencies in which a Non-Resident Indian can deposit their money in the Foreign Currency Non-resident Bank Account.
Abbreviation
Full Form
AUD
Australian Dollar
CAD
Canadian Dollar
CHF
Swiss Franc
EUR
Euro
GBP
Great Britain Pound
HKD
Hong Kong Dollar
JPY
Japanese Yen
SGD
Singapore Dollar
USD
United States Dollar
Features of FCNR (B) Account
The following are the salient features of a Foreign Currency Non-Resident (FCNR) Bank Account:
Foreign Currency Non-Resident Account is a currency-dominated account.
It is not a savings account like NRE or NRO account.
FCNR Account is a term deposit also known as a fixed deposit account.
It comes with a minimum tenure of 1 year and maximum tenure of 5 years.
Tax is exempted on the interest income of your FCNR Account.
Interest earned and the principal amount is fully repatriable.
An overdraft facility is available.
FCNR Account can be opened:
Individually
Jointly with other NRIs, PIOs, or OCIs.
Eligibility Criteria for FCNR Account
If an individual has to open an FCNR (B) account, the following is the eligibility criteria for account opening:
The individual has to be a Non-Resident Indian (NRI) or Person of Indian Origin (PIO) or Overseas Citizen of India (OCI).
A joint account can be held with other NRIs.
The individual must have held an Indian passport issued by the Government of India at any point.
Needs to be a citizen as per the Citizenship Act, 1955.
Minimum deposits to be made for at least 1 year to earn interest.
Interest is paid on 360 days to 1-year basis.
Documents Required to Open FCNR Account
After passing the eligibility criteria option, the following documents are necessary if a person wants to open an FCNR (Foreign Currency Non-Resident) Bank Account:
Valid passport
Passport size photographs
Address proof (of the country the individual is currently residing in)
Indian PAN Card or Form 60
NRI Status proof
Income proof
Premature Withdrawals Under FCNR (B) Account
For premature withdrawals:
Charges are applicable to close the FCNR account pre-maturely depending upon the bank
Interest will be paid as on the date of deposit if the amount is withdrawn prematurely
Interest is not paid if withdrawals are made before the completion of 1 year
Difference Between NRE, NRO, and FCNR (B) Accounts
Particulars
NRE Account
NRO Account
FCNR-B Account
Account Purpose
Account opened with earnings from the foreign residing country and denominated in (INR) Indian Rupee
Account opened with earnings made in India from Indian assets or investments like dividend, rent, interest, etc. and denominated in Indian Rupees
A fixed deposit account is offered to NRIs who have either an NRE / NRO account. Denominated in any of the foreign currencies stipulated by RBI
Account Type
Savings, Recurring, or Current
Savings, Recurring, or Current
Fixed Deposit accounts with a 1 year minimum tenure
Currency denomination
INR
INR
AUD, CAD, CHF, EUR, GBP, HKD, JPY, SGD, USD
Joint holding facility
Can be held with other NRI
Can be held with other Indian residents or NRI
Can be held with other NRI
Tenure of fixed deposits
From 1 to 3 years. For Asset-Liability Management purposes account can be held for a longer period
As applicable to resident accounts
1 to 5 years
Repatriation Facility
Balance is fully repatriable
Interest earned is fully repatriated
Interest earned and principal amount are fully repatriable
Exchange rates
Fluctuates with respect to existing exchange rates
Does not fluctuate in any circumstance
Fluctuates with respect to existing exchange rates
Taxability
Tax is exempted on the interest income
Interest income is taxable
Tax is exempted on the interest income
Past 10 Year annualised returns as on 01-11-2023
^Tax benefit are for Investments made up to Rs.2.5 L/ yr and are subject to change as per tax laws.
*All savings are provided by the insurer as per the IRDAI approved insurance plan.
Tax benefit is subject to changes in tax laws. Standard T&C Apply
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