Which fixed deposit is more beneficial: FCNR FD vs NRE FD.

Coming to the management of your funds, always trust an expert. You may be a field expert, high-end professional or an accomplished businessman, but when it comes to investing your funds in a different country do not forget to engage industry experts of the country. India, though, may not be an NRI, however, you may need help when it comes to making financial decisions in the country. This is all because both the financial and economic demographics of a country change periodically.

Investing in fixed deposits may sound ancient, but is still the most popular practice among Indians and NRI investors.

An NRI who wishes to park his funds in India needs to first open an NRI account with an authorized Indian bank. He can choose from either an NRO (Non-Resident Ordinary) account, NRE (Non-Residential External) account or FCNR (Foreign Currency Non-Resident) account. 

NRI fixed deposits are similar to term deposits. NRIs use an NRE account to open an NRE fixed deposit while they use their FCNR account to open an FCNR fixed deposit. 

Let us study the similarities and differences between both NRE Account fixed deposits and FCNR Fixed Deposits.


NRE Fixed Deposit



FCNR Fixed Deposit


  • Deposits maintained in the account is in Indian Rupee.


  • Maintained for parking foreign currency in Indian Rupee to use later.



  • Can be transferred to an Indian account if NRI wishes to move back to India.



  • Offers lucrative interest rates.



  • It is offered for a period anytime between 1 to 20 years.


  • Early withdrawal does not lead to any extra fees or charges.


  • Can be opened jointly with an NRI only.



  • Beneficial in transacting and transferring funds to Indian accounts.


  • Deposits maintained in the fixed deposit is in foreign currency.


  • Maintained for the purpose of parking foreign currency to reap benefits return on investments.


  • Can be kept as FCNR fixed deposit till maturity and then be converted into an RFC account.


  • Interest rates are calculated by RBI therefore is the same across all banks.


  • It is usually maintained for a period of 1 to 5 years.


  • Pre withdrawal of funds leads to penalty charges.


  • Can be opened jointly with an Indian resident, NRI or PIO.


  • The account holder can change the foreign currency in the deposit to any other foreign currency as well (subject to exchange rate fluctuations).


While both the deposits are NRI deposits they also share some points in common. 

  • The interest and the principal amount are fully repatriable.

  • Interest earned from both accounts is tax-free. 

  • Eligibility – Non-resident Indian (NRI) or Person of Indian Origin (PIO).

  • Documents – Copy of Passport, Valid work visa, Address proof of both India and abroad.


As we can see that the procedure that goes into opening an NRE fixed deposit and an FCNR fixed deposit are similar. While both the accounts give an NRI full flexibility in the repatriation and usage of funds, they also come with a few differences. These differences need to be studied clearly by an NRI before parking their funds in a fixed deposit. 


An NRI who may need funds to be used in India shortly should go for an NRE Account fixed deposit. While an NRI who operates in multiple currencies and may or may not need to use the funds in the Indian subcontinent can always look for an FCNR fixed deposit account. 


If you already have an NRI account in India, your partner bank will help you to get the best-fixed deposit services that best suit your needs. We at SBM India are always happy to support you with 24 x 7 technical support in case of any assistance that you may require. Also, visit SBM India to know more about our NRI accounts.

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