Eligibility
As in the case of NRE accounts, FCNR deposits can be opened by NRIs
Advantages
This is the only option available for NRIs for keeping their deposits in foreign currency. This account has a clear advantage that the customers' fund is protected from fluctuations in exchange rates. Moreover you can earn the interest on this deposit in the designated foreign currency.
Tax benefits
Interest earned on FCNR deposit is exempt from Income Tax as far as the depositor is not Resident in India or not ordinarily resident in India as per Income Tax Act. Deposit exempted from wealth tax.
Currency of deposit and period
The deposits can be maintained in any of the nine currencies- American Dollar (USD), British Pounds (GBP), Euro (EUR) , Japanese Yen (YEN), Australian Dollar (AUD), Singapore Dollar(SGD), Hong Kong Dollar (HKD), Swiss Franc(CHF) and Canadian Dollar (CAD). FCNR accounts can be opened only as term deposits (fixed deposits/cash certificates).
In the case of cash certificates, compounding of interest is on half yearly basis and for interest calculation 360 days been reckoned as one year.
The minimum period of deposit is one year and maximum period is five years.
This is the ideal deposit for those who want to take back the maturity proceeds out of India.
How to open the account.
FCNR can be opened by remittance from abroad in the designated currencies mentioned above. The remittance can be by way of TT, MT, DD or personal cheque. In the case of DD, it should draw on the country of the currency. During temporary visit to India by NRIs, such account can also be opened by tendering foreign currency notes/and travellers cheque. FCNR account can also be opened by transfer of funds from the NRE account of the prospective depositor.
Premature withdrawal
Penal interest on pre mature closure is waived in respect of FCNR deposits opened on or after 1-10-2003. Premature closure of FCNR deposits opened before 1-10-2003 is allowed subject to 1% penal interest. No interest if withdrawn before completion of one year.
Advance against deposits.
Rupee advance against the Deposit can be availed upto 75% of the rupee equivalent of deposit, subject to a maximum of Rs. 100L. The rate of interest on the advance is linked to the PLR (Prime Lending Rate) of the bank