FCNR is a good option like NRE Fixed Deposits and Non-Resident Ordinary Account (NRO) for Non-Resident Indians who would like to open a bank account in India. You can open an FCNR account jointly with other NRIs.
FCNR Fixed Deposits are considered to be the best investment option for NRIs looking to retain their money in foreign currency and earn good returns on foreign currency earnings.
FCNR deposits stand for Foreign Currency Non-Repatriable account deposits. This is a Fixed Deposit Foreign Currency account. FCNRs are not savings accounts but fixed deposit accounts. So, NRIS can place deposits in all major currencies including UK Pound, US Dollar, Canadian Dollar, German Deutsche Mark, Japanese Yen, Euro, etc.
You can open an FCNR account for a minimum term of 1 year. The maximum tenure is 5 years. Interest rates on FCNR term deposits are payable after the end of the first year. Interest is compounded on a half-yearly basis subsequently.
The interest you earned on your FCNR account is tax-free in India. However, you may be subject to tax in the country of your residence for such interest. Interest on FCNR deposits is tax exempt as long as an individual qualifies as an NRI or not ordinarily resident.
The interest rates vary between terms and from currency to currency. Also, different banks offer different rates. For example, the interest rate for a one-year FCNR deposit in US dollar would be different from the same for deposit in the Australian dollar. Interest rates on FCNR term deposit accounts should be set by the board of directors of a particular bank, under the broad mandate of RBI regulations.
Documents needed for opening an FCNR account will slightly vary from banks to banks. Usually, most banks ask to submit the following documents:
- Passport, self-attested copies of first and last four pages of the passport. That is pages with your name, address, date of birth, date, and place of issue, expiry date, photograph, and signature has to be submitted.
- Valid work permit/employment visa/Residence Visa/Residence Permit.
- Address proofs.