An account that can be opened with an Indian bank by a Non Resident Indian or a Person of Indian Origin in foreign currency is FCNR (B) account. The letter B in FCNR (B) stands for the word ‘Bank’. It is an account that allows the NRI to keep his deposits in foreign currency. Hassles of conversion can be reduced through such types of accounts.
๐Salient features of an FCNR account
➖FCNR is a foreign currency-denominated account.
➖FCNR is not a savings account. It is a term deposit with a minimum tenure of 1 year and a maximum of 5 years.
➖Interest income on FCNR accounts in nontaxable in India.
➖Both principal and interest are freely repatriable in your resident country.
➖It is possible to avail both rupee and foreign currency loans against your FCNR deposits.
๐Currencies are permitted under the FCNR scheme
According to the latest RBI circular in October 2011, FCNR permitted currencies are the ones that are freely convertible. These include the US Dollar, Pound Sterling, Euro, Japanese Yen, Canadian Dollar, Australian Dollar, Swiss Franc, Singapore Dollar, Danish Krone, and Hong Kong Dollar among others.
๐ FCNR loan
An FCNR loan is a loan in foreign currency that is availed by NRIs or Indian corporates against an FCNR deposit at select Indian banks according to RBI guidelines.
๐ Benefits of holding an FCNR account
The benefits of holding an FCNR account are numerous.
➖First and foremost, FCNR allows you to invest your earnings in the currency of your residence country. This helps you to protect yourself from the volatility of exchange rates.
➖Second, you don’t need to pay any income tax on your FCNR earnings in India. And the interest and principal are both freely repatriable.
➖Third, you can avail of a loan in any currency you want against your FCNR deposit.
๐Maximum and minimum tenure of FCNR deposits
The minimum tenure of an FCNR deposit is 1 year and the maximum is 5 years. If you withdraw within a year, no interest is paid. If it is withdrawn within the tenure, a penalty may or may not be levied depending on the bank.
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