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Foreign Currency (Non-Resident Indians) FCNR (B) Account

Eligibility to Open and Maintain FCNR A/c
With the exception of persons of Indian origin from Bangladesh and Pakistan, all NRIs and PIOs are eligible to maintain an FCNR account with an authorised bank in India.

  • Accounts may be opened with funds remitted from outside, existing NRE/ FCNR accounts, etc.
  • Remittances should be in the designated currency.
  • Conversion to currency other than the designated currency also permitted at the risk and cost of the remitter.
Features of FCNR Account
  • The account can be opened with funds remitted from abroad, or transferred from an existing NRE/FCNR account.
  • FCNR accounts can be opened with designated currencies, which are: GBP, USD, Deutsche Mark, Japanese Yen and the Euro.
  • Conversion to another designated currency is permitted at a cost to the account holder.
  • Only term deposits can be maintained in FCNR accounts, in a time range of 6 months to 3 years.
  • As per RBI guidelines, banks are free to offer interest on FCNR deposits below LIBOR rates, less 25 basis points for deposits between 6 months to one year, and LIBOR rates plus 50 basis points for deposits over a year.
  • Banks are also free to decide on a fixed or a floating rate of interest on FCNR term deposits.
  • Interest rates are reviewed periodically and determined by directives from the Reserve Bank (Department of Banking Operations and Development).
  • The account holder can choose the periodicity of interest, from half-yearly to annual payments. The interest can be credited to a new FCNR (B) account or a NRE/NRO account.
  • For permissible debits and credits, the regulations for FCNR accounts are similar to the NRE accounts.
  • For conversion of currencies, from designated currency to rupees and vice versa, the day’s rate of conversion will apply.
  • Funds from the FCNR account are allowed to move within the country at no extra cost to the account holder.
  • For loans and overdrafts against FCNR accounts, the same conditions as the NRE accounts apply.
  • In case of premature withdrawal of the FCNR Term Deposit, a penalty is levied. Interest paid on the account is calculated at a 1% below the committed rate if accounts are closed prematurely.
  • However, no interest is paid on deposits held for less than 6 months, and a penalty would have to be paid as per directives from the apex bank. The RBI guidelines prevail on these terms, issued as and when required.
FCNR A/c after Change in Resident Status
  • NRI deposits such as the FCNR can continue till the maturity date at the contracted rate of interest even after the account holder’s resident status changes to resident Indian.
  • However, except for interest rates and reserve requirements of FCNR deposits, these accounts are treated as resident accounts effective from the account holder’s date of return to India.
  • On maturity, these accounts are converted to either an RFC account or the Resident Rupee Deposit account.
  • As for joint accounts, the same rules as those for NRE accounts apply to FCNR deposits too.
  • For repatriation of funds from the FCNR account, the same conditions as those for NRE accounts apply.
  • The RBI does not provide any guarantee on foreign exchange.

Other Features -
  • Reserve Bank will not provide foreign exchange guarantee.
  • Lending of resources mobilized by authorized dealers under these accounts are not subject to any interest rate stipulations.

 

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