Foreign Currency Non-Resident a Fixed Deposit Option for NRI

Fixed deposits are one of the most popular investment products in India, and as an NRI you too can benefit from them. But with a variety of options available, choosing the right one can be confusing. One such option is Foreign Currency Non-Resident (FCNR) deposit accounts. An FCNR deposit is a fixed deposit account, held in foreign currency, which is available to NRIs who want to save and earn returns on their funds.

In this article, we will discuss what it is how it works and how you can get the best out of this investment option. So if you’re looking for an effective way to save your money while still making decent returns, read on to learn more about FCNR deposits in India.

What is Foreign Currency Non-Resident (FCNR)?

Foreign currency non-resident (FCNR) deposits are accounts held in foreign currency by resident Indian citizens in order to earn a higher rate of interest than what is available on domestic deposits. The account can be held in any of the major convertible foreign currencies, including the US dollar, pound sterling, euro, Japanese yen, and Swiss franc.

The FCNR deposit scheme was introduced by the Reserve Bank of India (RBI) in 1976 to attract foreign currency deposits from non-resident Indians (NRIs). The scheme was later extended to resident Indian citizens in 2003.

Interest earned on FCNR deposits is exempt from income tax in India. FCNR deposits also offer other benefits such as protection from changes in exchange rates and easy convertibility into rupees.

Since withdrawals from FCNR accounts are allowed only after completion of the tenure, these accounts act as a sort of forced savings for NRIs. This can be beneficial for NRIs who have a tendency to spend all their earnings and live beyond their means.

Why is FCNR Lucrative?

FCNR deposits are protected from currency fluctuations as they are denominated in foreign currency. This means that your deposit will not be affected by changes in the value of the Indian rupee against the foreign currency in which your deposit is held.


Additionally, FCNR deposits offer a higher interest rate than regular savings accounts. For example, as of July 2019, HDFC Bank offers an interest rate of 4% p.a. on FCNR deposits (in USD), compared to 3.5% p.a. on regular savings accounts (in INR).

Lastly, you can avail of a premature withdrawal facility with FCNR deposits – meaning you can access your funds before the maturity date if needed. This is not possible with regular savings accounts in India.

FCNR or NRE Fixed Deposit (FD)?

An FCNR deposit is a foreign currency-denominated deposit held in India by Non-Resident Indians (NRIs). The deposit can be made in any of the following currencies: US Dollar (USD), Pound Sterling (GBP), Euro (EUR), Japanese Yen (JPY), and Australian Dollar (AUD).

The key features of an FCNR deposit are:

·         Minimum deposit amount of USD 1,000 or equivalent.

·         Deposits can be made for a minimum tenure of 1 year and a maximum tenure of 5 years.

·         Deposits can be renewed for a further term at the end of the initial term.

·         Interest is paid on the deposited amount at maturity.

·         Premature withdrawal is not allowed.

·         NRIs can open an FCNR account jointly with resident close relatives.

An NRE Fixed Deposit is a Term Deposit account where you can park your surplus funds and earn interest. The interest earned is exempt from income tax in India. NRE Fixed Deposits can be opened by NRIs with any authorized dealer bank in India in Indian Rupees. The following are the key features of an NRE Fixed Deposit:

·         Minimum deposit amount INR 1,000/- or its equivalent in other currencies.

·         For banks other than the State Bank of India (SBI), the minimum deposit tenure is 1 year and the maximum tenure is 3 years.

·         For SBI, the minimum deposit tenure is 7 days and the maximum tenure is 10 years. 

Things to Remember

There are a few things to remember when investing in FCNR deposits:

·         The interest rate is locked in for the entire term of the deposit, so you know exactly how much interest you will earn.

·         FCNR deposits are not subject to Indian taxes, so your earnings are tax-free.

·         You can choose to have your earnings paid out in either USD or GBP, depending on which currency you deposited.

·         There is no limit on how much you can deposit into an FCNR account, so you can save as much as you like.

·         FCNR deposits are FDIC-insured, so your money is safe in the event of a bank failure.

In order to make a safe and secure investment, NRIs should opt for fixed deposits in India. They offer high-interest rates as compared to other countries, which makes them a lucrative investment option. Moreover, they are insured by the Indian government, which provides an added layer of security.

Ways to save your money

Saving money is a key part of financial planning, and there are a variety of ways to do it. One popular way to save money is through fixed deposits (FDs). FDs are a type of savings account where you deposit a lump sum of money for a set period of time and earn interest on the account.

There are many benefits to FDs, including the ability to earn higher interest rates than traditional savings accounts, the safety of your principal investment, and the flexibility to choose your term length. FDs can be a great way for NRIs to save money for their future goals.

To open an FD account, you can visit any NRI branch of the bank in India. The process is simple and you can start earning interest on your account immediately. When choosing an FD term, consider your future plans and needs so that you can select the best option for you.


As an NRI, you can open a Fixed Deposit account with an Indian bank in order to earn a higher rate of interest on your savings. The interest earned on your Fixed Deposit account is exempt from tax in India, so you can earn a higher return on your investment.

Fixed Deposits also offer the security of knowing that your money is safe and will not be subject to fluctuating exchange rates. You can choose to have your Fixed Deposit account denominated in US dollars or other major currencies, so you can rest assured that your money is protected.

With a Fixed Deposit account, you can earn a competitive rate of interest and enjoy the security of knowing that your money is safe.

DO’s and DON’Ts

It is essential to know the dos and DON’Ts before investing in a Fixed Deposit account in India as an NRI.


·         Invest in an FCNR account with a bank authorized by the Reserve Bank of India to accept foreign currency deposits.

·         Check the interest rates offered by different banks and compare them before investing.

·         Choose a tenure and deposit amount that best suits your needs and financial goals.

·         Invest in an FCNR account only if you are comfortable with the lock-in period.

·         Understand the terms and conditions of the deposit before investing.


·         Do not invest in an FCNR account with a bank that is not authorized by the Reserve Bank of India to accept foreign currency deposits.

·         Do not choose a tenure or deposit amount without considering your needs and financial goals.

·         Do not invest in an FCNR account if you are not comfortable with the lock-in period.

·         Do not invest in an FCNR account without understanding the terms and conditions of the deposit.