Do You Know These 4 Facts About FCNR Deposits?

In order to create a corpus, one needs a good amount of savings and investments. You can put away your money in bank fixed and recurring deposits or even invest in the share market. The idea is to plan your investments in such a way that you can accrue high returns and also liquefy the investment if and when needed. If you are a conservative investor, preferring to park your savings securely, a fixed deposit is the best way to go. NRIs, too, can make FDs out of their foreign currency earnings. Yes, you can open a Foreign Currency Non-Repatriable deposit or FCNR deposit. But do you know these 4 essential facts about this foreign currency deposit? Here’s all you need to know

1. FCNR is not exactly an account, but a fixed deposit

Most NRIs generally assume that FCNR is an account, but the fact is that it is a deposit. As an NRI, you can open a Non Resident External Rupee of NRE account and/or an NON Resident Ordinary Rupee or NRO account. You can deposit foreign currencies in the former account and Indian Rupees in the later. Once you have a good amount of savings in the NRE account, you can make a fixed deposit from it. These FDs could be termed as NRE fixed deposits, a term used interchangeably with foreign currency deposits.

2. You can maintain deposits in different major currencies

Most banks allow you to maintain your fixed deposit in different, major international currencies. Generally, the currencies in which you can maintain your FCNR deposits include Great Britain Pound Sterling, Euros, Japanese Yen, Swiss Francs, Danish Krone and Swedish Krona. You can also maintain the FD in different types of dollars which include American, Australian, New Zealand, Canadian and Singaporean Dollars.

3. You should know the minimum and maximum tenure and the penalties for premature withdrawals

Fixed Deposit for NRI can be opened for a minimum duration of 1 year, whereas the maximum FD tenure is generally 5 years. A handful of banks may also offer 10 year tenures for foreign currency fixed deposits. The greatest advantage of these deposits is that they are risk averse and you do not have to worry about currency fluctuations. Also, the interest you earn on these FDs is in the foreign currency in which the FD is maintained. You may also prematurely withdraw your FD before your chosen tenure ends, but you have to bear a penalty for premature withdrawals. If you decide to break your fixed deposit, before the minimum 1 year tenure, you may not be eligible to earn any interest pay out on your deposit.

4. You can open the deposit online

As an NRI, it may not be possible for you to visit your bank in India and create a fixed deposit account. This is why all banks offering NRI services, allow you to make your NRI fixed deposit online. That said the main source account for the foreign currency fixed deposit should be a foreign currency account opened overseas or an NRE account in India. You can easily create the FD by transferring funds from either of the bank account through wire transfers. You may also create this FD while you are in India by depositing a travellers’ cheque or make foreign currency cash deposits.
As is apparent from the term FCNR, this is a non-repatriable deposit. That said, you can completely repatriate the principal amount of the fixed deposit and the interest earned on it, when your FD matures. You also earn interest on a half-yearly basis on these deposits.