An FCNR (Foreign Currency Non-Resident) Account is a fixed deposit account designed for NRIs (Non-Resident Indians) to deposit income earned abroad in foreign currency. These accounts help NRIs grow their foreign earnings in India while avoiding currency conversion losses.
Here’s everything you need to know about FCNR Accounts, including their features, benefits, documents required, and taxation rules.
Key Features of FCNR Accounts
FCNR Accounts are term deposits held in designated foreign currencies such as USD, GBP, CAD, AUD, and SGD
Tenure ranges from 1 to 5 years
Interest is compounded semi-annually and paid in foreign currency
Premature withdrawals are allowed, but no interest is paid if withdrawn before one year
Loans can be availed against the FCNR deposit for personal or business purposes (excluding onward lending or land purchase)
Joint holding with other NRIs is permitted
Automatic renewal facility is available on maturity
Did You Know?
FCNR Accounts eliminate exchange rate risk because your deposit and interest are maintained in foreign currency. This makes FCNR FDs a smart choice during volatile currency movements.
Benefits of FCNR Accounts
Hold Deposits in Multiple Currencies
Choose from various freely convertible currencies like USD, GBP, CAD, AUD, and SGD.
No Forex Risk
Since FCNR deposits are held in foreign currency, there’s no loss due to INR depreciation.
Tax-Free Interest in India
The interest earned on FCNR deposits is completely tax-exempt in India as long as you maintain NRI status under FEMA.
Fixed Interest Rates
The interest rate is locked for the entire tenure and is typically higher than what banks in the NRI's resident country offer.
Full Repatriation
Principal and interest earned can be freely and fully repatriated to your overseas account without RBI approval.
No Deposit Limits
There’s no upper or lower limit on how much you can invest in an FCNR Account.
Flexible Tenure Options
Choose a convenient term between 1 and 5 years. Longer terms usually offer better rates.
Documents Required to Open an FCNR Account
NRIs and PIOs can easily open an FCNR Account by submitting the following documents:
Valid passport copy
Proof of NRI/PIO status (such as OCI/PIO card)
Overseas address proof
PAN card copy
Indian address proof (optional)
These documents can typically be submitted online via the bank's secure portal.
FCNR Interest Rate & Exchange Rate Protection
Interest rates vary based on the currency and deposit term. FCNR FDs generally offer higher interest than the depositor's resident country.
Because the deposit is held in foreign currency, there's no risk from currency fluctuations. This ensures the full value of your earnings remains intact when repatriated. Additionally, both principal and interest are fully repatriable and can also be transferred to your NRE or NRO Account if needed.
FCNR Account Taxation
Interest earned on FCNR deposits is tax-free in India as long as the account holder retains NRI status under FEMA
Once the account holder becomes a resident under FEMA, tax exemption continues only until the deposit matures
After maturity, interest on FCNR deposits becomes taxable unless held under the Resident Foreign Currency (RFC) scheme
Interest may be taxable in the depositor’s country of residence—check local tax laws for applicability
Conclusion
FCNR Accounts are ideal for NRIs looking to safeguard their foreign earnings from exchange rate risk while earning stable, tax-free returns. With flexible tenures, fixed interest rates, full repatriability, and multi-currency support, these deposits offer a powerful combination of security and convenience. If you're planning to park your foreign income in India without converting it into INR, an FCNR Account could be your perfect financial companion.