FCNR Account

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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The NRI, in order to invest in India, has to have any of the 3 types of accounts:

  • FCNR (B) – Foreign Currency Non-Resident (Bank) Account

  • NRE Account – Non-Resident External Account

  • NRO – Non-Resident Ordinary Account

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.

Investment Plans for NRIsInvestment Plans for NRIs

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

Investment Plans for NRIsInvestment Plans for NRIs

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

SIP Investment for NRIsSIP Investment for NRIs

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 5 Year annualised returns as on 01-05-2024

^The tax benefits under Section 80C allow a deduction of up to ₹1.5 lakhs from the taxable income per year and 10(10D) tax benefits are for investments made up to ₹2.5 Lakhs/ year for policies bought after 1 Feb 2021. Tax benefits and savings are subject to changes in 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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^^The information relating to mutual funds presented in this article is for educational purpose only and is not meant for sale. Investment is subject to market risks and the risk is borne by the investor. Please consult your financial advisor before planning your investments.

#The lumpsum benefit is calculated if policyholder invested ₹10000 monthly for 10 years in the fund with a policy term of 20 years. This Point To Point past performance data of last 10 years has been used to illustrate a scenario for the customers benefit. It is assumed that the past 10 years returns would have also been delivered in last 20 years. This is not guaranteed and not in anyway indicative of what the customer may actually get 20 years from now. The investment is subject to market risk and the risk is borne by the policyholder.

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