The FCNR account is an account that can be opened in foreign currency only with an Indian bank, as the account name suggests. This type of account can be opened for a minimum period of 1 year to a maximum of 5 years. No deposits in the form of Indian Rupee can be made into this account. Regular interest is paid on this account by the bank. To learn more about FCNR account, see the below FAQ's
Any Non-Resident Indian or Person of Indian Origin can open an FCNR Account. Individuals from Bangladesh & Pakistan can also open FCNR Accounts but would need the prior permission of Reserve Bank of India (RBI) to do so. A person can mean an individual, a company, a partnership, a trust, etc. can open an FCNR Account.
An NRI or Non-Resident Indian is an individual who resides outside India but is an Indian Citizen.
A ‘Person of Indian Origin (PIO)’ is a person resident outside India who is a citizen of any country other than Bangladesh or Pakistan or such other country as may be specified by the Central Government, satisfying the following conditions:
A PIO will include an ‘Overseas Citizen of India’ cardholder within the meaning of Section 7(A) of the Citizenship Act, 1955. Such an OCI Card holder should also be a person resident outside India.
Yes, the FCNR Account can be a Joint Account, provided all the account holders are either NRIs or PIOs or any combination of the two.
The FCNR Account can be in any foreign currency which is freely convertible.
FCNR Account can be a Fixed Deposit Account only.
The Fixed Deposit can be for a period between one year to five years. The term cannot be less than one year.
The permitted credits into the FCNR Account are:
The permitted debits are:
FCNR account balance can be fully repatriated, which means the total balance of the FCNR account can be sent abroad.
Income earned in the account is exempt from Income Tax in India. The balance is also exempt from Wealth Tax. Which means that this account is tax-free, in India.
Yes, the banks can give loans on the security of the FCNR Account to the account holder or third parties, as per their lending norms. There are no limits prescribed by the RBI on the same.
The loans taken on the basis of the FCNR account cannot be repatriated abroad. It can be used in India only for the purposes specified in the loan application as read along with the regulations.
The repayment of the loan can be done by inward remittance. It can also be repaid by utilizing the balance held by the account holder in their NRO Accounts.
No, premature withdrawals are not allowed if the loan has been taken basis the security of the FCNR Account.
The banks can extend loans to the NRI or PIO from their foreign branches or foreign correspondents who are based outside India. Such loans can be also given to third parties, at the request of the account holder. The purposes for which this loan is taken should be as per the local laws or in other words, should be for purposes permitted by law in the country it is taken. The balance of the FCNR account can act as collateral security, for the same.
The rate of interest on FCNR Account is based on the directives of RBI under the guidelines issued by the Department of Banking Regulations. These are generally in the range of 1.5% to 2.5% per annum.
Yes, the FCNR Account can be operated under a POA. There are restrictions on the application of the POA. These restrictions are applicable to withdrawals for local payments or remittance to the account from abroad.
The FCNR Account is allowed to be continued till maturity and at the contracted rate of interest, if it is the will of the account holder, to continue the same. On maturity, the bank should convert the FCNR account deposits into INR Deposits or a Resident Foreign currency(RFC) account. The depositor should be eligible to open an RFC Account. This option is also available to the account holder.
The account holder should inform his bank immediately of the change in status & the bank will act accordingly.