Earning in Foreign Currency? FCNR Deposit Accounts Could Be for You

FCNR deposits let NRIs save foreign income in approved currencies with tax-free returns, repatriation benefits and protection from FX risks.

Earning in Foreign Currency? FCNR Deposit Accounts Could Be for You

FCNR deposit

A Foreign Currency Non-Resident (FCNR) deposit account is a valuable option if you are earning in foreign currencies and wish to save or invest your income in India. This account assists you in retaining the value of your income, enables you to receive consistent returns, and enjoy repatriation flexibility. Also, learning about FCNR and NRE deposits can help you get to know the eligibility criteria and how they fit your financial goals.

What Is an FCNR Account?

The FCNR account is a fixed deposit account for Non-Resident Indians (NRIs) to store foreign currencies. You can deposit your overseas income inan existing FCNR deposit in approved currencies. The deposit remains in the preferred foreign currency and the balance is not converted into Indian Rupees. IDFC FIRST Bank’s FCNR accounts offered in 5 currencies such as USD, AUD, GBP, EUR and SGD are designed to help NRIs retain the full value of their foreign income while earning stable, tax-free returns.

Benefits of an FCNR Account

Holding an FCNR account has several benefits, some of which include:

Protection from exchange rate fluctuations: As the account stores savings in foreign currency, it will protect your savings against rupee fluctuations.
Tax exemption: FCNR deposits allow you to earn tax-exempt interest in India, further maximizing returns..
Full repatriation: You can transfer both the principal amount and the interest earned abroad without any restrictions.
Competitive interest rates: FCNR deposits may offer attractive returns depending on the currency and tenure.

With banking partners like IDFC FIRST Bank, you can access the convenience of managing FCNR deposits online and also enjoy automatic renewals upon maturity, ensuring continuous growth of your investments without any manual intervention.

Eligibility and Key Features

Here are a few factors to know before you apply for an FCNR account:

Who can open: NRIs, Overseas Citizens of India (OCIs), and Persons of Indian Origin (PIOs), Seafarers working on International Vessels and Oil rig employees working on international offshore projects are eligible to open this account.
Tenure: The FCNR account term ranges between one year to five years, but also depends on the bank’s terms.
Premature withdrawal: Allowed by many banks, although you may lose or earn reduced interest if the deposit is withdrawn within a year of booking.

FCNR vs. Other NRI Deposit Types

Choosing between NRE, NRO, and FCNR mainly depends on the type of income you are earning and the currency you wish to hold. The following table highlights how these accounts differ in terms of currency, taxation, repatriation, and ideal usage.

Feature	NRE Deposit	NRO Deposit	FCNR Deposit
Currency Type	Indian Rupees (INR)	Indian Rupees (INR)	Foreign Currency (USD, GBP, EUR, etc.)
Source of Funds	Foreign income remitted to India	Income earned in India	Foreign income
Interest Earnings	Tax-free in India	Taxable in India	Tax-free in India
Repatriation	Fully repatriable	Repatriate funds up to USD 1 million yearly	Fully repatriable
Exchange Rate Risk	Subject to INR fluctuations	Subject to INR fluctuations	Protected from exchange rate risks
Tenure	Ranges from 1 year to 10 years	Ranges from 7 days to 10 years	Ranges from 1 to 5 years

Final Thoughts

FCNR deposits such as those offered by IDFC FIRST Bank, bring a tax-efficient, secure, and flexible way to save your foreign income without being affected by fluctuations of the rupee’s value. However, before investing, weigh your currency exposure, tenure, and tax position to maximise your earnings.

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