Further, with a host of other benefits, some guidelines or rules are prescribed in respect of the premature withdrawal of FCNR deposits which NRIs should be well acquainted with before locking in their money in FCNR bank deposits. So, for the know-how of all NRIs and Person of Indian Origin (PIOs) hereforth is detailed restrictions in its respect that though vary from bank to bank.

As, the apex institution, RBI is providing banks with swap deal, banks only recently have fully disallowed premature or partial withdrawals from such FCNR deposits or are levying a heavy fees for deposit accounts opened for a tenure of over 3 years. For instance, India's major private sector bank, ICICI Bank has completely disallowed premature or partial withdrawals for all new or renewed FCNR deposits with the bank for 3 or more years with effect from 25th September'2013. Other banks such as Axis Bank are following suit and disallowing premature withdrawal.

While some other institutions are adhering to the usual provision of 1% lower interest in case of premature withdrawal of FCNR deposits for the period for which the deposit is held certain other banks are curbing on the premature withdrawal by levying a considerable fee as penalty.

Other foreign based banks allowing premature withdrawal of FCNR deposit held with them for a tenure of less than 3 years will charge variable penalty amounts. And, as per the Economic Times report, Standard Chartered Bank shall recover all losses or costs incurred by the bank in respect of the foreign currency deposit including costs associated to terminating, obtaining or creating any hedge or liquidating the deposit.

However, such restriction is offset with a higher rate of interest which many banks are offering for FCNR foreign currency deposits for over 3 years.

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