What is FCNR-B Account ?

in Q & A


What is Foreign Currency Non-resident Bank Deposits : FCNR-B Accounts ?

NRIs can avoid Risk of Foreign Exchange fluctuations by keeping their overseas money in Foreign Currency Non Resident Bank Deposits (FCNR-B)  and you can convert back money to the foreign currency. The account should be opened by the non-resident account holder. FCNR-B enable NRIs to earn good returns on their foreign currency earnings.

Key Features of FCNR-B (Foreign Currency Non Resident Bank Deposits) accounts

  • FCNR(B) accounts are maintained in Foreign currency only
  • No need to worry forex rate fluctuation risk as the accounts are always maintained in the foreign currency
  • Source of funds to FCNR-B accounts should be from abroad(can be from NRE or FCNR accounts)
  • USD, GBP, EUR, JPY, CAD and AUD are allowed to maintained in this account
  • Remittances in other Currencies will be converted into any of the currencies named above at the option of the depositor
  • Interest will be made in the same foreign currency
  • Interest income earned on the money in a FCNR account is non-taxable in India
  • No gift tax on Gifts made out of balances
  • No wealth tax on balances held
  • FCNR-B is maintained only in term deposit
  • Period of deposits range from 1 year to maximum 5 years.
    FCNR-B deposits can be closed before the due date(penalty apply)
    NRIs can appoint Power of Attorney Holder to residents in India for operating their FCNR(B) accounts in India
  • You can have joint account with other NRIs ( Resident Indians cannot be joint account holders in NRE accounts)

NOTE: Acceptance of deposits under 2 earlier schemes namely Foreign currency Non resident Accounts (FCNR) and Foreign currency (Ordinary Non repatriable) (FCONR) deposit scheme were discontinued in w.e.f. 15/08/94. Deposits already accepted are however, allowed to continue till their maturity and thereafter no renewals would be permitted.

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{ 1 comment… read it below or add one }

ashok malhotra December 28, 2011 at 6:27 am

Thanks for good info on FCNR acct. In view of RBI deregulating interests on NRI deposits , what is the latest interest rate offered by Indian Banks on FCNR deposits ?

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