FCNR (Foreign Currency Non Resident) account is a fixed deposit account offered by banks in India to non resident Indians (NRIs) and is operated in foreign currency.
These are quite popular investments for NRIs because of the higher interest rate offered by banks in India as compared to their country of residence. For e.g. As of today State Bank of India offers 3.06% interest on its FCNR (US Dollar) deposit for 5 year term; in comparison Wells Fargo offers 0.7% for 58 months CD Deposit (Fixed deposit).
The second benefit is the principal and interest earned is fully repatriable, which means NRIs can transfer their money back without much formalities.
The third benefit is the investor has NO currency exchange risk as you deposit in foreign currency, the interest earned is in foreign currency and when you withdraw you get back the amount in currency in which the deposit was made.
Also Read: Best NRE Fixed Deposit Interest Rates
The fourth benefit is the interest earned on FCNR deposits are tax free in India. However it may be taxable in their country of residence.
Most banks accept deposit in USD (US Dollar), GBP (Pound), EUR (Euro), AUD (Australian Dollar), CAD (Canada Dollar), CHF (Swiss Franc), SGD (Singapore Dollar), JPY (Japan Yen). A few banks also accept deposit in HKD (Hong Kong Dollar), NZD (New Zealand Dollar) and SEK (Swedish Krona).
This post compares the interest rate offered on US Dollar FCNR Deposits.
US Dollar FCNR Deposit Rates:
The table below compares the interest rates offered on US Dollar FCNR deposits across various tenures. The highest FCNR rates have been highlighted.
As can be seen Tamilnad Mercantile Bank, Indian Overseas Bank and Vijaya Bank pays highest interest on FCNR deposits in US Dollars.
|Banks||1 Year||2 Years||3 Years||4 Years||5 Years|
|Bank of Baroda||2.15%||2.37%||2.83%||2.96%||3.06%|
|Bank of India||1.90%||2.12%||2.33%||2.46%||2.56%|
|Bank of Maharashtra||1.90%||2.12%||2.33%||2.71%||2.81%|
|Indian Overseas Bank||2.65%||2.87%||3.33%||3.46%||3.56%|
|Kotak Mahindra Bank||1.80%||1.80%||1.80%||1.80%||1.60%|
|Punjab National Bank||2.15%||2.37%||2.58%||2.71%||2.81%|
|South Indian Bank||2.65%||2.62%||2.83%||2.96%||3.06%|
|State Bank of India||2.15%||2.62%||2.83%||2.96%||3.06%|
|Tamilnad Mercantile Bank||2.65%||2.87%||3.33%||3.66%||3.76%|
|The Ratnakar Bank||2.05%||2.10%||2.19%||2.21%||2.25%|
FCNR Account Rules:
The minimum deposit tenure for FCNR FD is 1 year and maximum tenure is 5 years.
In most cases there is NO penalty for pre mature closure of FCNR deposit account. However in case of premature closure before completion of 1 year, no interest would be paid.