The interest rates on fixed deposits in India are comparatively higher than in other countries. You can earn decent returns on your deposit and accumulate savings for the future. As an NRI, you can invest your surplus funds through any of the NRI accounts available in banks in India. However, you may come across foreign exchange risks while converting your investment into Indian currency.
The Indian government has allowed all NRIs to invest in India in the FCNR account with foreign currency. You can skip the hassle of currency conversion to INR as applicable to NRE accounts and NRO accounts.
What is it?
The foreign currency account allows an NRI of Indian nationality or origin to deposit money in foreign currency in India. The acceptable foreign currencies are US Dollar, British Pound, Euro, Japanese Yen, Australian Dollar, Canadian Dollar, etc.
Since you maintain your account in foreign currency, you can skip currency rate fluctuations and earn fixed FCNR rates on the deposit, usually more than your resident country.
The features
The foreign currency non-resident bank account helps you deposit and withdraw funds in any of the currencies mentioned above. The FCNR deposit rates are not taxable in India, and nor is the principal deposited in these accounts taxable under the Wealth Tax, which is a significant advantage for all NRIs.
No currency fluctuations
Only NRI’s or Person of Indian Origin (PIO) can open the account in any foreign currencies, thus eliminating the risk of currency fluctuations. You receive regular interest on these accounts. You can invest in deposits with a maturity of more than one year and less than five years only.
Account opening
You can open the account jointly with another NRI or even another resident Indian. You can also make your relatives an account nominee as the nomination facility is available for any NRI, PIO, and Indian resident.
Currency conversion
Converting your money to another designated currency is permissible by the bank. You can use the foreign currency in any applicable countries without worrying about arranging funds at the last minute. However, you cannot open recurring deposits with foreign currency accounts.
Loan facilities
You can also apply for loans against the FCNR account. However, you cannot use the loan amount for re-lending, carrying on agricultural or plantation activities, or investing in the real estate business.
Fund transfer
The funds in the account must necessarily come from your overseas bank account through a wire transfer or cheque transaction. You can also transfer funds from an existing NRE account.
Other investment options
Apart from investing in fixed deposits, you can now invest in real estate and stock markets. With the introduction of the automatic route, you do not require permission from the RBI to invest in them.
