Home > > > FCNR Deposits: Must-know rules and regulations

FCNR Deposits: Must-know rules and regulations

Author : Page of NEI Banking | Published On : 19 Apr 2024

Investing confers innumerable benefits. It lets you build a significant financial corpus over time, which is handy for ticking off various financial goals on your bucket list. It also provides much-needed financial relief during emergencies. Depending on your investment, you may also be able to save on taxes. For these reasons, you should invest as soon as possible.

A Non-Resident Indian or NRI Fixed Deposit is a fantastic option to explore. It is simple and secure. NRI FDs are of three main types: Non-Resident Ordinary, Non-Resident External, and Foreign Currency Non-Resident Deposits. All three FDs have different features. Consider your investment criteria to make a suitable investment.

If you wish to protect your investment from foreign currency fluctuations, consider investing in an FCNR Deposit. The deposit is held in a foreign currency, earning you modest interest through your opted tenure. What’s even better is the interest income you earn is 100% tax-free, and you enjoy full repatriation. Here are various FCNR FD rules and regulations you should be mindful of:

  • You can invest in an FCNR FD individually or jointly with another NRI. You can also assign a nominee to your FD investment.
  • You can choose to your hold FCNR FD in any foreign currency approved by the Reserve Bank of India.
  • FCNR FD interest rates differ from one bank to another. Explore the market, learn about various banks' interest rate offerings, and invest with a bank offering the most competitive FCNR Deposit rates.
  • The interest income will differ depending upon your currency of holding.
  • You can invest in an FCNR Deposit for any tenure ranging between one to five years. Ideally, you should stay invested throughout the opted tenure. However, for any given reason, you cannot do so, you can opt for a premature withdrawal.
  • Typically, you need to pay a penalty to opt for a premature withdrawal. The applicable penalty will depend on when you choose to make a premature withdrawal.
  • Generally, the bank pays no interest when you make a premature withdrawal within one year of investment. The bank may charge a fixed amount as a penalty if you make a premature withdrawal after one year.
  • However, it is recommended that you do not make a premature withdrawal, as it would compromise your long-term goals. Instead, apply for a Loan against the FCNR Account. This would let you borrow a significant amount at a competitive interest rate for a flexible tenure, helping you meet your financial requirements systematically.
  • As mentioned, you enjoy full repatriation with an FCNR FD. This ensures you can transfer your money to your country of residence in your time of need. You need to follow a simple repatriation procedure, which can be completed by visiting the nearest bank branch or via online banking platforms.

Note: This is a general mention of the FCNR Deposit rules and regulations. They may vary for every bank. Hence, contact your bank’s customer representative for specific information.