Regarding growing wealth, a safe, risk-free investment vehicle in India is a non-negotiable necessity for non-resident Indians. Such investments ensure a safety net against market volatility, even as your idle funds earn interest. Foreign Currency Non-Resident Deposits check all these boxes.
An FCNR Deposit provides a secure, risk-free investment avenue offering fixed interest rates and protection from Forex fluctuations. You can enjoy tax exemptions in India with free and full repatriation.
What is an FCNR Deposit?
An FCNR Deposit Account is a fixed-term investment option for NRIs. It works like a Term Deposit scheme with a fixed tenure and interest rate. This FD holds your overseas earnings in foreign currencies the bank permits. Your funds enjoy immunity from exchange rate risks. You can open it for one to five years, with premature withdrawals attracting a penalty. However, if you liquidate the deposit before the completion of a year, no interest is payable.
What are the benefits offered?
New-age banks offer flexible and lucrative FCNR Deposits, letting you make the most of your foreign savings. Let us unleash their benefits:
1. Risk-free investments for NRIs: An FCNR FD works like an ordinary FD, wherein the applicable interest rate remains fixed throughout the tenure. Since it does not rely on market conditions, opening it offers a risk-free proposition for NRIs.
2. Immunity from Forex fluctuations: Since FCNR holds your savings in foreign currency, your funds do not go through currency conversion. Upon maturity, you receive the principal and interest in the original foreign currency. Your funds stay protected against foreign currency fluctuations, which can sometimes undermine returns.
3. Tax exemption in India: Unlike the NRO Fixed Deposit Account that attracts taxation on fund repatriation, the interest earned on Foreign Currency Accounts is exempt from tax in India. However, it might be taxable in your country of residence. Consult an advisor to understand your overall tax obligation.
4. Fund repatriation rules: The interest and principal on your deposit are freely and fully repatriable, like the NRE Fixed Deposit Account. You can easily transfer money from your deposit to your resident country account.
5. Compounded returns: All banks compound the interest rate on the deposit on a half-yearly basis. This makes an FCNR decidedly more attractive for NRI investments. You can open this kind of NRI FD Account in India by logging in to the bank’s website and submitting the necessary documents.
6. Investment in multiple currencies: In an FCNR Deposit, you can invest your money in different currencies, such as EUR, AUD, USD, GBP, JPY, and CAD.
Conclusion
Offering attractive returns, tax-free interest, and protection against Forex fluctuations, FCNR Deposits are a smart choice for NRIs to maximise their savings and manage their wealth. You can approach the bank or check their website for interest rates and other benefits.
