Foreign Currency Non Resident (Bank) Account – FCNR (B) Account

 

 

 

1.     Foreign Currency Non Resident (Bank) Account – FCNR (B) Account


FCNR accounts can be opened only as term deposits (fixed deposits/cash certificates).

FAQ -  FCNR Account
What is an FCNR account?

An FCNR account is a term deposit account that can be maintained by NRIs and PIOs in foreign currency. Thus, FCNRs are not savings accounts but fixed deposit accounts.

What foreign currencies can one maintain in FCNR accounts?

Prior to 2011, FCNR deposits were allowed to be maintained in six currencies: US dollar, Pound Sterling (GBP), Euro, Japanese Yen, Australian dollar and Canadian dollar. However, in October 2011, the RBI decided that authorised dealer banks in India may be permitted to accept FCNR deposits in any permitted currency. 'Permitted currency' for this purpose would mean a foreign currency which is freely convertible and popularly include Danish Krone, Swiss Frank and Swedish Krona among others.

How can one transfer funds to FCNR accounts?

The funds in an FCNR account must necessarily come from your overseas funds. There are several ways in which you can open an FCNR account.

-You can transfer funds from your overseas bank account directly to open an FCNR account. You can do this either as a wire transfer or a cheque transaction

-You can transfer funds from an existing NRE account

-You can open an FCNR account using foreign currency notes or travelers cheques when you visit India

What terms are available?

You can open an FCNR account for a minimum term of 1 year and maximum term of 5 years.

Is premature withdrawal available?

Yes, you can withdraw your FCNR before completion of the selected term. Premature withdrawal is subject to a penal interest of 1%. Moreover, no interest is payable if the deposit is closed within a year.

What is the current interest rate on FCNR account?

The interest rates vary between terms and from currency to currency. Rates may also vary between banks. For instance, the rate for a 1 year FCNR deposit in US dollar would be in the range of 2.5-3% while the same for a deposit in Australian dollar would be 5-6%.

It is important to note that this interest is tax free in India. However, you may be subject to tax in the country of your residence for such interest.

Are balances in the FCNR accounts freely repatriable?

Yes, balances in FCNR can be freely repatriated outside India.

Can funds in the FCNR account be used for local India payments?

Yes, you can use the balance in FCNR account for making local payments in India.

"However, as FCNR can be maintained only as term deposits, it would be more convenient to make payments after transferring the balance to NRE account," explains Rajesh Dhruva, a chartered accountant and Chief Executive of Femaonline.com.

Can you hold FCNR accouns jointly?

Yes, the RBI, in 2011, permitted NRIs to hold FCNR accounts jointly with other NRIs or with residents who are close relatives. In this case, the resident relative can operate the account as a power of attorney holder.


Is nomination facility available?

Nomination facility is available in FCNR accounts and the nominee can be either an NRI or a resident Indian.

"The balance in FCNR deposit of a deceased NRI can be credited to an NRI nominee's FCNR account and such funds can be freely repatriated," Dhruva adds.

Can NRIs avail loans against FCNR deposits?

Rupee loans and foreign currency loans can be taken in India against the security of the deposit. "Presently such loans are restricted to Rs 10 million. These loans can be repaid out of maturity proceeds and/or local resources. Banks may also give loans to resident individuals, firms or companies against collateral security of FCNR deposits," says Dhruva.

What is the procedure for opening FCNR account?

You can open an FCNR deposit from overseas. You would need to submit the following documents to the bank:

-The account opening form with the signature verified by your overseas bank or the Indian embassy/ consulate/ high commission or a notary public

-Passport size photos

-Copies of your passport and visa duly attested

-Proof of foreign address

-Initial remittance

Several other documents such as cancelled cheque, overseas bank statement, income documents may be required. Document requirements may also vary between countries. Check with your bank for details.

 

 

 

 

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