Indian diaspora stands out as one of the largest and most prominent communities residing outside the homeland.
With millions of Indians scattered across the globe, maintaining any sort of connection with India often becomes a necessity.
To facilitate this need, RBI Came up with various accounts like NRE, NRO, and FCNR accounts. This account is specifically tailored for Non-Resident Indians (NRIs) and Persons of Indian Origin (PIOs) living abroad.
This specialized account is designed to enable NRIs to deposit their foreign earnings in designated foreign currencies.
The FCNR Deposit account offers NRIs the opportunity to hold their funds in foreign currency denominations, thereby shielding them from currency exchange fluctuations.
The interest rates offered on FCNR Deposits are typically higher compared to domestic savings or fixed deposit accounts, making them an attractive investment avenue for NRIs seeking lucrative returns on their foreign earnings.
In this article, we will discuss what an is FCNR Deposit, the Features of an FCNR Account, Eligibility, How to open an FCNR Account, and much more.
What is FCNR?
The FCNR or Foreign Currency Non-Resident Account is a specialized banking account offered by Indian banks to Non-Resident Indians (NRIs) and Persons of Indian Origin (PIOs) residing abroad.
This account allows NRIs to deposit and maintain their foreign earnings in designated foreign currencies, thereby shielding them from currency exchange rate fluctuations.
The FCNR account typically accepts deposits in the following currencies-
- US Dollar (USD)
- British Pound (GBP)
- Euro (EUR)
- Canadian Dollar (CAD)
- Australian Dollar (AUD)
- Japanese Yen (JPY)
It offers NRIs the flexibility to hold their funds in foreign currency denominations while earning competitive interest rates on their deposits.
Features of an FCNR Account
The following are the features of an FCNR account-
- FCNR accounts accept deposits in various foreign currencies such as the US Dollar (USD), British Pound (GBP), Euro (EUR), Canadian Dollar (CAD), Australian Dollar (AUD), Japanese Yen (JPY), and others
- FCNR accounts are typically structured as fixed deposit accounts, where the deposited amount is held for a predetermined period, ranging from one year to five years or more
- FCNR accounts offer competitive interest rates on foreign currency deposits
- NRIs can freely repatriate both the principal amount and the accrued interest earned in an FCNR account to their country of residence without any restrictions
- NRIs are protected from exchange rate fluctuations by investing in the FCNR account
- Interest earned on FCNR deposits is exempt from Indian income tax for NRIs
- NRIs can open FCNR accounts jointly with other NRIs or residents of India
- FCNR account holders can nominate beneficiaries to receive the funds in the event of the account holder’s demise
- Some banks offer the option to avail of loans or overdraft facilities against the security of FCNR deposits, allowing NRIs to access liquidity while maintaining their foreign currency holdings
- Many banks provide online banking facilities to FCNR account holders
Eligibility for FCNR Account
The following are the eligibility for the FCNR Account-
- Applicants must be Non-Resident Indians (NRIs) or Persons of Indian Origin (PIOs) residing outside India
- There is usually no specific age requirement
- Applicants must comply with the bank’s KYC norms
- Banks have a minimum deposit requirement to open an FCNR account which varies from bank to bank and currency to currency
- Applicants must adhere to the foreign exchange regulations of both India and the country where they reside
How to Open an FCNR Account?
The following are the steps that you’ll have to follow to open FCNR Account-
- Choose a good bank offering FCNR Account services and visit the bank premises in India or abroad branch
- Inquire about the FCNR Account and prepare the documentation needed for opening the bank account
- Fill out the application form with details like personal information, overseas address, preferred currency, nomination details, etc.
- Now attach the documents mentioned below and submit the form to the bank representative
- You may have to attest your documentation as per the bank guidelines. This may involve notarization by a notary public or certification by an Indian embassy/consulate in your country of residence
- Make the initial deposit into your FCNR account and the bank will initiate the verification process
- You will receive confirmation along with account details, including the FCNR account number and Multi-Currency International Debit Card
Documents Required for FCNR Account
The following are the documents required for the FCNR Account-
- Valid passport
- Passport size photographs
- Address proof (of the country the individual is currently residing in)
- Indian PAN Card or Form 60
- Aadhaar Card
- NRI Status proof
- Income proof
FAQ
An FCNR (Foreign Currency Non-Resident) account is a type of bank account offered by Indian banks to Non-Resident Indians (NRIs) and Persons of Indian Origin (PIOs) to deposit and maintain foreign currency funds.
FCNR deposits typically have fixed tenures ranging from 1 year to 5 years, although some banks may offer longer terms. The depositor can choose the tenure based on their preference and financial goals.
Yes, NRIs and PIOs can hold FCNR accounts jointly with other NRIs or PIOs, subject to the bank’s rules and regulations regarding joint account ownership.
Upon maturity, the depositor has the option to renew the FCNR deposit for another term, withdraw the funds, or transfer them to another account as per their preference.
Yes, FCNR deposits can be pledged as collateral to secure loans from Indian banks. The loan amount sanctioned depends on the value of the FCNR deposit and the bank’s lending policies.fix
