Foreign Currency Non-Resident Bank Deposits

A Foreign Currency Non-Resident Bank, FCNR(B), deposit is a term deposit maintained with an authorised Indian bank by an eligible non-resident in foreign currency. Since both principal and interest are payable in the deposit currency, the depositor is protected from rupee exchange-rate movements.

Eligibility and form

FCNR(B) accounts may be opened by Non-Resident Indians, NRIs, and eligible Persons of Indian Origin, PIOs, under the foreign-exchange regulations.

• Only term deposits, not savings or current accounts, can be maintained under the scheme.
• Deposits are denominated in a permitted, freely convertible foreign currency and may be opened singly or jointly with another eligible non-resident.
• The prescribed maturity ranges from one year to five years.

Repatriation and returns

The deposit is fully repatriable, making it suitable for non-residents who want to retain funds in foreign currency while placing them with an Indian bank.

• Both the principal and interest can be transferred outside India without conversion into rupees.
• Interest is paid in the currency in which the deposit is maintained.
• Interest earned is exempt from Indian income tax while the depositor satisfies the applicable residential-status conditions.

Exchange risk and resource mobilisation

The depositor does not bear rupee depreciation risk because repayment remains denominated in foreign currency. The authorised bank bears and manages the foreign-exchange risk associated with deploying these funds.

• FCNR(B) deposits mobilise foreign-currency resources from the Indian diaspora for the domestic banking system.
• Unlike an NRE deposit, which is rupee-denominated, an FCNR(B) deposit preserves the chosen foreign-currency denomination.
• Premature withdrawal and lending against the deposit are governed by Reserve Bank of India rules and the bank's applicable terms.

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