FCNR Fixed Deposits – Pros and Cons

Eligibility Criteria – Who can open FCNR FD?

FCNR FD is available for:

NRIs – Non-Resident Indians

PIOs – Persons of Indian Origin, also called Overseas Indians

These are people who are Indians by birth or descendants of Indian origin (Certain exceptions may apply to those residing in Pakistan and Bangladesh).

Tax Implications of FCNR Fixed Deposits

As per the rules stated in the Income Tax Act, the following are note-worthy points related to the taxation of FCNR fixed deposits:

• An investment made in an FCNR FD is not taxable in India
• Interest earned on such deposits is also not taxed in India

Which foreign currencies are permitted for FCNR deposits?

As per the rules laid down by the Reserve Bank of India, customers can deposit their foreign savings in any of the following currencies:

• US Dollars – $
• Canadian Dollars – C$
• Great Britain Pound (GBP) or Pound Sterling – £
• Japanese Yen – ¥
• Euro – €
• Australian Dollars – A$

Note: This list is subject to changes from the RBI. It may include the likes of Swiss Franc, Danish Krone and Swedish Krona among others. Customers are advised to contact the respective bank about the same.

FCNR FD – Repatriation of funds

Repatriation or transfer of funds from one country to another is permitted in FCNR fixed deposits. As per the rules laid down by the Reserve Bank of India,

• The principal amount, i.e. initial deposit amount, is freely repatriable
• Interest earned on such deposits is freely repatriable

What is the maximum tenure for FCNR Deposit?

As per the current regulations of RBI, banks are allowed to accept FCNR fixed deposits for the maximum tenure of 5 years. However, unlike regular domestic time deposits, FCNR deposits are to be kept for a minimum of 1 year.

To put it simply, the tenure for FCNR fixed deposits is 1 year to 5 years.

Premature Withdrawal of FCNR Fixed Deposits

Banks or service providers may have different rules and regulations regarding premature or early withdrawal.

For instance, the FCNR deposits offered by YES Bank will not provide any FCNR deposit rate of interest if the deposit is withdrawn before the completion of 12 months.

Similarly, Axis Bank may ask or charge a penalty if the withdrawal is done before the stipulated term of a minimum of 1 year.

In addition to this, premature withdrawal is not permitted if the depositor has already availed the loan against the deposit. In simple terms, it is important to reconfirm the terms applicable to a premature or early withdrawal of these deposits before or while investing in it.

FCNR FD Rates of Top Banks across tenure

• SBI FCNR Rates

Interest Rate on the following deposit, value and term for today:

PERIOD/CURRENCY	USD	GBP	EURO	CAD	AUD	JPY
1 year	0.72	0.6	0.01	0.62	0.15	0.02
Above 1 year to less than  2 years	0.72	0.6	0.01	0.62	0.15	0.02
2 years to less than 3 years	0.76	0.75	0.01	0.68	0.22	0.05
3 years to less than 4 years	0.94	0.88	0.01	0.92	0.37	0.05
4 years to less than 5 years	1.15	1	0.1	1.18	0.65	0.05
5 years	1.37	1.11	0.15	1.4	0.92	0.05

• HDFC FCNR FD Rates

Period	GBP	USD	Euro	JPY	AUD	CAD
1Yr to < 2 Yrs	0.01%	0.01%	0.01%	0.01%	0.01%	0.01%
2Yr to < 3 Yrs	0.01%	0.01%	0.01%	0.01%	0.01%	0.01%
3 Yrs to < 4 Yrs	0.01%	0.01%	0.01%	0.01%	0.01%	0.01%
4 Yrs to < 5 Yrs	0.01%	0.01%	0.01%	0.01%	0.01%	0.05%
5 Yrs only	0.01%	0.20%	0.01%	0.01%	0.20%	0.50%

• ICICI Bank FCNR FD Rates

Period/Currency	USD	GBP	JPY	CAD	AUD	SGD	HKD
>= 12 months < 24 months	0.23	0.01	0.01	0.22	0.01	0.25	0.1
>= 24 months < 36 months	0.3	0.14	0.01	0.23	0.04	0.37	0.18
>= 36 months < 48 months	0.52	NA	NA	NA	NA	NA	NA
>= 48 months < 60 months	0.78	NA	NA	NA	NA	NA	NA
60 months	1.03	NA	NA	NA	NA	NA	NA

Interest rates effective from 1st April 2021

 

• Axis Bank FCNR FD Rates

(Interest rates, all in %, are effective from 20th April 2021)