Money Matters: All You Need To Know About Foreign Currency Non Resident (FCNR) Account For NRIs

For Non-Resident Indians (NRIs) seeking to manage their finances back home in India, Foreign Currency Non-Resident (FCNR) accounts offer a convenient and secure option. FCNR accounts allow NRIs to deposit and hold foreign currency funds in designated accounts in India. In this comprehensive guide, we'll delve into the details of FCNR accounts, their features, benefits, and how NRIs can make the most of them.

What Is An FCNR Account?

FCNR accounts are term deposit accounts maintained in foreign currencies by NRIs and Persons of Indian Origin (PIOs). These accounts allow NRIs to deposit funds in major foreign currencies such as USD (US Dollar), GBP (British Pound), EUR (Euro), CAD (Canadian Dollar), AUD (Australian Dollar), and JPY (Japanese Yen). An individual who holds Indian citizenship and is classified as a non-resident under FEMA (Foreign Exchange Management Act) regulations is eligible to establish an FCNR account.

As per RBI, “The Foreign Currency Non-Resident (FCNR(B)) scheme was introduced with effect from May 15, 1993, to replace the then prevailing FCNR(A) scheme introduced in 1975, where the foreign exchange risk was borne by RBI and subsequently by the Govt. of India.”

Essential Features of FCNR Account

1. Currency Options

FCNR accounts offer a range of currency options, allowing NRIs to hold deposits in their preferred foreign currency.

2. Term Deposits

Funds deposited in FCNR accounts are held as term deposits with fixed tenures ranging from 1 year to 5 years, depending on the bank's policy.

3. Interest Rates

Interest rates on FCNR deposits are generally higher compared to domestic deposits (since they are influenced by global market conditions) and are determined by factors such as currency, tenure, and prevailing market conditions.

4. Repatriation

Both principal and interest earned on FCNR deposits are fully repatriable.

5. Tax Exemption

Interest earned on FCNR deposits is tax-free in India for NRIs, making it an attractive investment option.

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Necessary Documents Required To Open FCNR Account

• Valid passport

• Address proof (of the country the person currently residing in)
• Passport size photographs
• Indian PAN Card or Form 60
• Income proof
• NRI Status proof

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How To Open An FCNR Account

To open an FCNR account, NRIs need to fulfil certain eligibility criteria and provide the necessary documentation. An FCNR account can be opened online or by visiting the nearest branch, using any freely convertible foreign currency. It's important to recognise that various foreign currencies are associated with different FCNR interest rates.

FCNR Accounts offer a good investment option for NRIs seeking to preserve their funds in foreign currency while enjoying attractive returns. By holding your money in a foreign denomination, you can mitigate the volatility of exchange rate fluctuations, thereby securing higher returns with minimal risk. Opting for an FCNR Account is particularly advantageous if you're uncertain about where to allocate your hard-earned income.

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