What is an FCNR Account & Why NRIs Use It
Neha Navaneeth
Marketing & Content Associate
Dec 3, 2025
FCNR account is a Foreign Currency Non Resident deposit which allows the NRIs to keep their money in a foreign currency but bank in India. It addresses one of the primary issues of NRIs that prefer to keep management of overseas earnings without the loss to fluctuations in exchange rates. Knowledge of the FCNR account definition and its strategic benefits can assist the NRIs to make sound investment decisions that will retain wealth across the borders.
What is FCNR Account?
The FCNR full form is the Foreign Currency Non-Resident account which is specifically referred to as FCNR (B) whereby B stands for Banks. This is unlike the abandoned FCNR (A) scheme which was superseded in 1993. The FCNR deposit meaning is a term used to refer to a fixed deposit which enables the NRIs to keep their savings in the foreign currency in the Indian banks at a tenure of one to five years.
Key Characteristics of FCNR Accounts include:
Currency Type: Held entirely in foreign currency, protecting your money from exchange rate risk.
Account Nature: A fixed deposit only, with funds locked for the selected tenure.
Tenure Options: Choose a deposit period between 1 and 5 years.
Tax Status: Interest is fully tax free in India, offering strong tax efficiency for NRIs.
Repatriation: Both principal and interest are freely repatriable without any limits.
Who Can Open FCNR Account?
Understanding who can open FCNR account remains crucial before considering this line of investment. The eligibility system is well defined according to the banking regulations and FEMA guidelines.
Eligible account holders include:
Non-Resident Indians (NRIs): Indian nationals living abroad due to work, business or any other reason.
Persons of Indian Origin (PIOs): Foreign nationals with Indian ancestry.
Overseas Citizens of India (OCs): Indian-origin persons in possession of OCI cards.
Documentation and Eligibility For Opening an FCNR Account
Documentation Requirements:
Valid Passport: You must provide a passport with current visa stamps that confirm your NRI status.
Overseas Address Proof: Address proof issued within the last three months.
PAN Card or Form 60: Either your PAN card or the Form 60 is needed by the banks.
Photographs: New photographs have to be included as a part of the documentation.
Documents to demonstrate NRI Status: Acceptable documents can include work related documents, residence permits or visa documents.
Eligibility for Opening an FCNR Account:
Existing Account Required: You must already have an active NRE or NRO account, as FCNR deposits cannot be opened as your first account in India.
Joint and Individual Ownership: FCNR deposit can be opened singlehandedly or in partnership with another NRI, PIO, or OCI.
Resident Joint Holding: Some banks allow joint holding with a resident close relative on a “former or survivor” basis, with the NRI as the primary holder.
Acceptable Currencies in FCNR Accounts
FCNR deposits' primary purpose is to provide non-resident Indians with the ability to hold their funds in different freely convertible currencies. Since the FCNR deposit rates differ by currency and tenure, the NRI can select a currency that corresponds with his/her income sources and future expenses.
Major Currencies Accepted:
US Dollar (USD): The most preferred currency option and often offers some of the highest interest rates.
British Pound Sterling (GBP): A strong choice for NRIs living in the United Kingdom.
Euro (EUR): Well suited for individuals residing in European countries.
Canadian Dollar (CAD): Ideal for NRIs based in Canada.
Australian Dollar (AUD): A convenient option for those living in Australia.
Japanese Yen (JPY): Suitable for NRIs residing in Japan.
What are the Benefits of FCNR Deposits?
FCNR accounts have good benefits to NRIs as they wish to safeguard their funds against currency fluctuations, get tax free returns and have the benefit of having the money available at all times.
Tax Advantages: In India, you will get full tax benefits in the form of tax free interest and principal as compared to 30 percent TDS in NRO account, which will enable you to get maximum after tax benefits.
Currency Protection: The money is kept in foreign currency during the tenure and this eliminates the exchange rate risk and conversion expenses.
Repatriation Benefits: Principal and interest could be transferred outside the country and there were no restrictions to this or any approvals needed as compared to the NRO accounts.
Flexibility in investment: The tenures vary between one to five years with various interest payouts choices, loan facilities, and auto renewal services.
How to Open an FCNR Account?
The process of opening FCNR Account includes the following steps:
Step 1: Sign into your online bank portal with your credentials of NRE or NRO account.
Step 2: Click on the deposits section and choose the choice of FCNR Fixed Deposit.
Step 3: Select your desired foreign currency and tenure of between one and five years.
Step 4: Type in the deposit amount and it must not be less than 1,000 USD or equivalent.
Step 5: Choose the frequency of your interest payment for the interest, i.e. annual, quarterly, and cumulative at maturity.
Step 6: which involves transferring funds to your current NRE or NRO account to complete the deposit.
Step 7: Get confirmation with the bank as well as your digital FCNR deposit receipt through email.
How NRIs Use FCNR Account
FCNR accounts have a number of practical financial applications by NRIs. They enable non-residents to keep money in a fixed foreign currency with an Indian bank, and thus, they are a favourite tool for managing international income and long-term savings.
The use of FCNR Deposits by NRIs:
Store foreign salary without conversion: Salaries in USD, GBP, EUR or other currencies may be saved directly, without losing their value on currency exchange.
Guard against loss of wealth due to INR depreciation: It is advisable to save in a good currency so that over time, the savings are not affected by fluctuations in the exchange rates.
Construct long-term reserves: FCNR deposits have a fixed tenure of 1-5 years, meaning that they are similar to stable foreign-currency FDs.
It is easy to repatriate funds: At the time of maturity, both the principal and the interest may be sent back home without restrictions.
Collateral loan: Overdrafts or a loan against FCNR deposit can be used as security without breaching it in many banks.
Conclusion
The FCNR accounts are considered to be one of the safest and tax efficient methods for NRIs to protect their foreign income in India without losing the full financial flexibility. Calculating your assets in a foreign currency means not only do you maintain your wealth without the affected by the weakest rupee, but also you get interest without tax and the ability to repatriate money without hurdles. Understanding what is FCNR account, the FCNR deposit meaning, and who can open an FCNR account helps you make informed decisions that align with your global financial goals.
Download the Rupeeflo app and open your NRE/NRO/Gift city accounts today!
FAQs
1. What is the difference between FCNR and NRE accounts?
An NRE account holds funds in Indian Rupees and offers tax-free, fully repatriable savings or deposits. An FCNR account is a foreign-currency fixed deposit that protects against exchange rate risk while also providing tax-free, fully repatriable returns.
2. Can I take a loan against my FCNR deposit?
Yes, banks allow loans against FCNR deposits, offering liquidity without breaking the fixed deposit.
3. What is the maximum period of an FCNR deposit?
FCNR deposits range from minimum one year to maximum five years. Depending on your financial aspirations, banks let you select any duration within this period of 1 to 5 years.
4. Are FCNR deposits tax-free in India?
Yes, FCNR deposits are fully tax free in India on both interest and principal. Unlike NRO accounts returns which are taxable, FCNR returns remain untouched.
