A Complete Guide to Opening, Features, and Closure
Foreign Currency Non-Resident (Bank) [FCNR(B)] deposits provide Non-Resident Indians (NRIs) with a secure and efficient way to invest their foreign earnings in India while protecting both principal and interest from exchange rate fluctuations. Governed by Reserve Bank of India (RBI) guidelines, FCNR(B) deposits also offer tax-free interest in India, making them a preferred investment avenue for NRIs.
Eligibility Criteria
The following individuals are eligible to open FCNR(B) deposit accounts:
- Non-Resident Indians (NRIs)
- Persons of Indian Origin (PIOs)
- Overseas Citizens of India (OCIs)
Additionally, seafarers working on foreign vessels and certain offshore workers may also qualify, subject to RBI norms.
Joint FCNR(B) accounts are permitted:
- With another NRI/PIO/OCI
- With a resident Indian relative on a “former or survivor” basis
Opening Process
To open an FCNR(B) deposit:
- Choose an Authorized Bank
Select an Indian bank authorized to offer FCNR(B) deposits. - Select Currency and Tenure
FCNR(B) deposits can be opened in designated foreign currencies such as:- USD, GBP, EUR, JPY, AUD, SGD, CAD, etc.
Tenure options range from 1 year to 5 years, with a minimum deposit of USD 1,000 or equivalent.
- Fund the Deposit
Deposits can be funded through:- Inward remittances from overseas
- Transfer from an NRE account
- Wire transfers or foreign currency cheques
- Foreign currency notes (during visits to India, subject to declaration norms)
- Submit Documentation
Required KYC documents typically include:- Passport and valid visa
- PAN card
- Overseas address proof
- Proof of NRI/PIO/OCI status (where applicable)
Applications can be submitted online or at designated bank branches.
Key Features of FCNR(B) Deposits
- Foreign Currency Denomination
Both principal and interest remain in foreign currency, eliminating foreign exchange risk. - Attractive Interest Rates
Rates are often competitive when compared to term deposit rates in overseas markets. - Interest Payment
Interest is compounded on a half-yearly basis and payable only after completion of one year. - Tax Treatment
Interest earned is fully exempt from tax in India under prevailing laws. - Repatriation
Both principal and interest are fully repatriable and can be transferred abroad in any freely convertible currency, subject to applicable conversion rates. - Operational Restrictions
Cheque books and debit cards are not issued against FCNR(B) deposits. Account management is typically available through net banking. - Nomination Facility
Nomination can be registered in favor of a resident or non-resident individual. - Auto-Renewal
Deposits are generally auto-renewed on maturity unless specific closure instructions are provided.
FCNR(B) Deposit Snapshot
| Feature | Details |
| Eligible Currencies | USD, GBP, EUR, JPY, AUD, SGD, CAD, etc. |
| Tenure | 1 to 5 years |
| Minimum Deposit | USD 1,000 or equivalent |
| Interest Payment | Half-yearly compounding (after 1 year) |
| Tax Status | Interest tax-free in India |
| Repatriation | Full repatriation of principal and interest |
Premature Closure Rules
FCNR(B) deposits may be withdrawn prematurely, subject to RBI guidelines and bank-specific terms:
- If withdrawn before one year, no interest is payable.
- If withdrawn after one year, interest is typically paid at:
- 1% lower than the contracted rate, or
- The applicable rate for the completed tenure,
whichever is lower.
To initiate premature closure, the depositor must submit a request through their relationship manager or bank branch. The proceeds are paid in the original foreign currency along with adjusted interest.
Maturity and Renewal
Upon maturity:
- The deposit amount is returned in the original foreign currency along with accrued interest.
- Depositors may choose auto-renewal or provide instructions for closure and repatriation.
For NRIs returning to India permanently, FCNR(B) deposits can be seamlessly converted into:
- Resident Foreign Currency (RFC) accounts, or
- Resident rupee accounts, as per applicable regulations.
