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.
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.
Following are the foreign currencies in which a Non-Resident Indian can deposit their money in the Foreign Currency Non-resident Bank Account.
|GBP||Great Britain Pound|
|HKD||Hong Kong Dollar|
|USD||United States Dollar|
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:
Jointly with other NRIs, PIOs, or OCIs.
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.
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:
Passport size photographs
Address proof (of the country the individual is currently residing in)
Indian PAN Card or Form 60
NRI Status proof
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
|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|
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