What is An FCNR Account?

Whether you reside in India or an NRI, you need a place to store your assets and savings. It is essential to have a bank account for keeping all the currencies safely without the fear of them getting stolen or lost. You can withdraw the funds from it whenever needed and also apply for loans. You can also use different debit and credit cards for the purpose.

One of the essential kinds of investments NRIs can consider is an FCNR account to invest in equities and bank accounts to get assured returns. The merger of NRI portfolio investments with foreign portfolio investments with revised interest rates has encouraged NRIs to invest in India. A Foreign Currency Non-Resident bank account is a term deposit account that allows investors to transfer their foreign income to India in the same currency as their resident country.

What are the features of the account?

A foreign currency account has savings in a foreign denomination. It is not a savings account but a term deposit account with a minimum tenure of one year and a maximum tenure of five years. The interest income on this account is tax-free in India. The principal, as well as the interest, are freely repatriable to your resident country. You can get both rupees as well as foreign currency loans against the deposits in your account.

What makes these accounts attractive?

Among a wide range of options like NRE and NRO accounts for NRIs to invest in India, these accounts are preferred by most of them because the currencies can get freely converted. The kinds of currencies include the US Dollar, Pound Sterling, Japanese Yen, Euro, Australian Dollar, Canadian Dollar, Singapore Dollar, Swiss Franc, Hong Kong Dollar, and Danish Krone.

The deposits in these foreign currency accounts are exempt from Indian Income Tax. You can use internet banking or visit the bank’s branch for making the transfer. You can also take loans using this account. According to the RBI guidelines, the loan is available in foreign currency that you and even Indian corporates can use against the deposit at select Indian banks. You can raise funds against both accounts in Indian and foreign currencies from any part of the world.

Check the bank policies before submitting a loan application as each of them have different regulation for repayment. The FCNR rates vary with the kind of currency and the deposit tenure. If you withdraw within the first year, there is no interest payment. But if you remove it within the term, you pay the penalty. Open this account by sending remittance from overseas by internet banking or directly submitting a request to the bank branch.

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