FCNR Deposit

An FCNR (FCNR full form: Foreign Currency Non-Resident) account allows NRIs to keep a Fixed Deposit account in India. This account allows you to save your money earned as an NRI in the currency of the nation from which it was earned.

FCNR Means

Non-resident Indians or people of Indian origin (PIO) can open an FCNR account, which is a foreign currency-denominated account. FCNRs are similar to FDs for Indian residents, except they are in foreign currency. They are excellent investment possibilities for NRIs who want to start investing in the country before moving on to other stock market assets. US Dollars, Pounds Sterling, Euro, Japanese Yen, Australian Dollars, and Canadian Dollars can all be held in FCNR deposits. The danger of exchange rate swings is minimized because the money is stored in those currencies. The interest that is earned over these deposits is completely tax-free.

As a result, the return is larger, and the risk is lower, making it a suitable location to start investing. These are term deposit accounts, not savings accounts. There are no fees if you remove your money before the maturity date, but the interest will not be paid until the year has passed. It's simple to open with an NRE account that you already have in India as an NRI. All of your earnings, including principal and interest, as well as credit facilities such as an overdraft, are all repatriable.

Features of the FCNR Account

Mentioned here are some of the major attributes of the FCNR Account:

1) Currency: 

It's a bank account that's denominated in a different currency. This feature indicates that the money will not be converted to rupees and will remain in the NRI's preferred currency among the RBI-approved currencies.

2) Tenure of the Deposit:

It's a term deposit account, not a savings account. It has a one-year minimum and a five-year maximum tenure. If the NRI's residency status changes during this time, they can keep their FCNR accounts open until maturity at the agreed-upon interest rate. NRIs can also choose to compound interest every six months and pay it out at the end of the year. NRIs, on the other hand, will not receive any interest if they remove their money before the year is through.

3) Taxes:

According to Indian law, FCNR interest rates earned on these accounts are not taxed.

4) Repatriation:

Both the FCNR rates and the principle income can be freely repatriated.

5) Eligibility Criteria:

Deposits in FCNR make you eligible for INR loans. The maturity proceeds might be used to repay these debts.

6) Account Types:

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

 

Eligibility Criteria for FCNR Account

Individuals who fall into the following categories are eligible to create an FCNR FD account in India:

Persons of Indian Origin (PIOs) who are often known as Overseas Indians and Non-Resident Indians (NRIs).

Documents Required to Open an FCNR Account

To register an FCNR account, you must provide the following documents in addition to your basic eligibility as an NRI or Person of Indian Origin (PIO):

  • Employment/Residence Visa or Work/Residence Permit as proof of NRI status.
  • PIOs must have a valid PIO/OCI card or equivalent proof of PIO status, as well as a signed and completed PIO declaration.
  • Furthermore, for NRI seafarers, a current work contract and a copy of the CDC, as well as a disembarkation stamp on the last page and a FEMA declaration, are required.
  • A valid passport must be presented, as well as a recent passport-size color photograph.
  • In India, address evidence is required (optional)
  • Proof of the address in your country of residence.
  • A copy of your PAN card or Form 60 from India

Benefits of an FCNR Deposit

Consider the following advantages of creating an FCNR fixed deposit account:

  • Banks can give account holders loans secured by funds in FCNR FD accounts.
  • The FCNR FD account's interest and principal are both freely repatriable (movable) to the depositor's place of residency with no restrictions.
  • As FCNR accounts are kept in a foreign currency, there are no FX rate risks. To put it another way, both the interest and the principal are transferred in the currency in which the account is maintained, with no exchange loss.
  • The account holder can use the FCNR FD maturity proceeds to settle any foreign currency loans taken outside of India.

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