What is FCNR account?

 

FCNR Accounts have become a popular tool for investment for NRIs in India, especially after the Union Budget 2019. The revised interest rates and merging of foreign portfolio investments (FPI) with NRI portfolio investments have made these accounts the topmost investment options for NRIs.

What are the FCNR Accounts?

FCNR is an acronym for Foreign Currency Non-Resident (FCNR) bank (B) account, which is a term deposit account that allows the Non-Resident Indian (NRI) or a Person of Indian Origin (PIO) to transfer their foreign income to India in the same currency in which they are earning. This protects them against exchange rate risks.

Features of an FCNR account

  • FCNR is a foreign currency-denominated account, where you can invest in your resident currency.

  • FCNR deposit accounts are not a savings account and have a minimum tenure of 1 year and a maximum of 5 years.

  • No need to pay income tax on interests earned from FCNR accounts.

  • Both principal and interest are freely repatriable in your resident country.

  • Both corporate and non-corporate clients can avail rupee and foreign currency loans against their FCNR deposit anywhere in the world.

  • Joint accounts can be opened with fellow NRIs or close Indian relatives.



Currencies and interest rates under the FCNR scheme

FCNR permits freely convertible currencies, including US Dollar, Pound Sterling, Euro, Japanese Yen, Canadian Dollar, Australian Dollar, Swiss Franc, Singapore Dollar, Danish Krone, and Hong Kong Dollar among others, as mentioned in the latest RBI circular of October 2011.

The FCNR interest rates vary with the bank and the tenure of the deposit. For USD, the minimum rates can be 1.3% for GBP and a maximum of 3%.

Disadvantages of holding an FCNR account

  • Your FCNR fixed deposits can be of 1 - 5 years tenure only, and you may not earn any interest if you close your account before completion of the first year.

  • The banks may become unable to repay your funds in case of a financial emergency or recession.

Opening an FCNR account

There are three ways:

  • Either by sending remittance from overseas

  • Or by internet banking (if you have NRE/ NRO accounts)

  • Or by submitting a request to SBM Bank branch

You will require the following documents for the same:

  1. Valid passport copy

  2. Proof of NRI or PIO status

  3. Overseas and Indian address

  4. Indian PAN card copy

  5. Passport-sized coloured photographs

  6. A filled-in account opening form

  7. Documents attested by the Indian Embassy or a public notary or the equivalent.

How to transfer the funds to your FCNR account?

  1. Through cheques or wire transfer directly from your bank overseas.

  2. From another account (NRE/FCNR).

  3. When in India, the proceeds from Travelers Cheques would work; but if your amount exceeds USD 5,000, you’ll need to get a currency declaration form.

FCNR account is a lucrative and legitimate option if you want to invest your earnings in India. Keep these points in mind while you’re going for it to get a tax-free return while living in a foreign country.

Comments

Post a Comment

Popular posts from this blog

Why is India a Good Destination for Investment

Image
India continues to be an attractive destination for the investors, and form a huge part of the world’s fastest-growing economies. Indian residents and Non-Resident Indians(NRIs) are actively looking to earn money by Investing in India. Also, if the investments are made by NRIs then it is treated as ‘foreign investments’ as per the Indian foreign exchange regulations, making India one of the top recipients of  foreign remittances   from its diaspora. Here are some reason why India is a good place for investment:- Indian economy is one of the world's fastest-growing economies According to the Department of Promotion of Industry and Internal Trade, India has crossed the $70 Bn mark in the Fiscal Year 2019-20 and recorded a total FDI inflow of $73.45 Bn, ranking amongst the top countries for investments by leading investors. Indian infrastructure story More than $1.5 trillion investments have been planned for Indian infrastructure for the next two decades across the key government...
Read more

All you need to know about an FCNR Account.

Image
  Providing NRIs with lucrative returns without much hassle was the main objective with which the FCNR account was first introduced. This primary objective still holds.  What is an FCNR Account? FCNR stands for Foreign Currency Non-Resident Account. It is a term deposit account popularly known as an FCNR deposit . These fixed deposit accounts are opened for depositing foreign currency income earned overseas. The account is maintained in the same foreign currency as deposited.  NRIs (Non-Resident Indians) and PIOs (Person of Indian Origin) are eligible to open an FCNR account with an authorized bank or dealer.   FCNR account is more beneficial to those NRIs who are sure to repatriate their funds from the account on maturity. Also, FCNR deposits are a good option for NRIs who are looking for a secure hassle-free fund deposit option in India. You can book your FCNR Account in  US Dollars Canadian Dollars Australian Dollars Pound Sterling Swiss Franc Euro Japan...
Read more

What are the benefits of opening an NRI account?

Image
NRI account s can be opened by Non-Resident Indian who reside outside the geographic territory of India. This account facilitates account holders to manage transactions in the currency of their country of residence. There are types of NRI saving account one can opt to open: NRE Account NRO Account NRE Account: NRE (Non-Resident External) account is accessible to deposit overseas savings as rupee dominated. It is an account opened in India in the name of NRI. One can open a joint account between two Non-Resident Indians or a Person of Indian Origin with the SBM NRE savings account . Benefits of NRE account: Interest 6% p.a. with monthly payout of interest Tax-free returns Fully repatriable Competitive forex rates Dedicated Relationship manager Preferential pricing on a host of products and service Premium privileges with Personal concierge NRO Account: NRO (Non-Resident Ordinary Rupee) is an account opened in India by the name of NRI to manage the income earned in India. That earning c...
Read more