What is an FCNR deposit and why it’s a great option for NRIs

Managing your finances as a Non-Resident Indian (NRI) requires careful planning to ensure your money grows while addressing currency and tax considerations. One financial instrument that NRIs should consider leveraging is Foreign Currency Non-Resident (FCNR) Deposits. Offering the dual benefit of capital preservation and low-risk returns, FCNR deposits play a significant role in an NRI's financial portfolio. This article explains what FCNR deposits are, their unique advantages, and why they could be the right choice for you.

What is an FCNR deposit and what are its benefits?

An FCNR deposit is a type of deposit account that allows NRIs to invest in foreign currencies. Unlike regular fixed deposits that operate in Indian Rupees, FCNR deposits are maintained in designated foreign currencies such as USD, GBP, EUR, AUD, SGD, and others. This feature protects NRIs from exchange rate fluctuations, making it an ideal investment for those earning in foreign currencies.

IDFC FIRST Bank’s FCNR Account offers a seamless way for NRIs to invest in FCNR deposits. Its key benefits include:

• Currency options:Since deposits are maintained in foreign currencies, you are safeguarded from exchange rate fluctuations that could otherwise erode your savings’ value. IDFC FIRST Bank offers FCNR account in 5 major foreign currencies namely: USD (US Dollar), GBP (British Pound), EUR (Euro), AUD (Australian Dollar), and SGD (Singapore Dollar), to suit diverse earning patterns.


• Attractive interest rates:IDFC FIRST Bank’s FCNR deposits offer higher returns compared to regular savings accounts, making it a lucrative investment option for NRIs.


• Flexible tenure:You can enjoy the flexibility to choose tenures ranging from 1 to 5 years to align with your financial goals.


• Tax benefits:Interest earned on FCNR deposits is exempt from income tax in India, as per current guidelines.


• Easy account management:Manage your money from anywhere with IDFC FIRST Bank’s award-winning mobile banking app and net banking services.


• Seamless repatriation:Both interest and principal amounts are fully and freely repatriable.


• Auto-renewal: On maturity, your funds are automatically re-invested for further tenures without manual intervention to ensure continuous growth of your investment.


• Safety:FCNR deposits are held in the bank under strict regulatory oversight, ensuring the safety of your funds.

When should NRIs consider an FCNR deposit?

An FCNR deposit is ideal in the following scenarios:

• Preserving foreign earnings:If you wish to maintain your income in foreign currency without worrying about exchange rate risks.


• Tax planning:For NRIs seeking tax-efficient investment options in India.


• Short-to-medium term goals:Perfect for financial goals with a timeline of 1 to 5 years.


• FCNR deposits vs NRE and NRO accounts

FCNR deposits stand out compared to NRE (Non-Resident External) and NRO (Non-Resident Ordinary) accounts in several ways: How to open an FCNR deposit with IDFC FIRST Bank 

With IDFC FIRST Bank, opening an FCNR deposit is a hassle free process, supported by dedicated relationship managers and robust digital platforms for online banking and mobile banking. Here’s how it works:

1. Eligibility: The following individuals with an active NRI Bank account (NRE/NRO account) with IDFC FIRST Bank can open an FCNR fixed deposit.
   
   
   1. Non-Resident Indians
   
   
   2. Person of Indian Origin (PIO)
   
   
   3. Overseas Citizen India (OCI)
   
   
   4. Seafarers working on international vessels
   
   
   5. Oil rig employees working on international offshore projects


2. Documentation: Existing NRI account holders of IDFC FIRST bank can fill the FCNR deposit form. Additionally, Form 60 must be submitted in case PAN is not available.


3. Deposit process: You can fund your FCNR account through Foreign Currency Remittances from overseas or funds from any other Bank’s FCNR account in India.


4. Interest calculation: The interest on FCNR deposits is compounded at intervals of 180 days each and thereafter for the remaining actual number of days.

Conclusion

FCNR deposits are a smart investment choice for NRIs looking to protect their foreign earnings from exchange rate volatilities, while enjoying tax benefits and attractive interest rates. With IDFC FIRST Bank’s FCNR account, you gain access to competitive rates, multiple currency options, and a hassle-free banking experience. Explore the possibilities of securing your financial future today by opening an FCNR account with IDFC FIRST Bank.