Everything You Need to Know About FCNR (B) Account

FCNR stands for Foreign Currency Non-Resident Account. For non-resident Indians (NRIs) looking for a safe and profitable way to manage their foreign income in India, an FCNR (B) account is a good option. This account, while minimizing the currency risk, helps in optimizing returns. This account offers several benefits and features that help NRIs fulfill their financial requirements.

However, there are several more things that you need to know about the FCNR (B) account. For instance, can you break or withdraw from the FCNR (B) account before maturity? What penalty charges do you need to pay if you do so? Are these types of questions about the account triggering you out? Read on and get the answer.

What is an FCNR (B) Account?

An FCNR (B) account helps NRIs with convertible foreign currencies to maintain a fixed deposit in India for a tenure ranging from 1 to 5 years. As the account maintains your investment in foreign currency, it keeps your funds safe during currency fluctuations at the time of tenure deposit. Additionally, like the NRE accounts, the funds and the interest earned in the FCNR (B) account are tax-free in India.

Further, through this account, you can simply transfer your foreign funds from your NRE account or vice versa. Additionally, you can also from your foreign account can remit your funds to this account in India. Considering this, you can convert the funds as per your desired foreign currency, at the exchange rate stated by your bank. Mostly, the banks in India accept the FCNR (B) in the following foreign currencies:

• US Dollar ($)
• British Pound £
• Euro €
• Australian Dollar (A$)
• Japanese Yen ¥
• Canadian Dollar (C$)

Additionally, as per the Foreign Exchange Management Act (FEMA) regulations, Indian banks can accept the funds in any foreign currency that is convertible freely. Also, you can deposit any amount without any restrictions in your FCNR (B) fixed deposit account. Here, the principal amount is the term deposit, and the earned interest is fully repatriable. This means that without paying any additional charges, you can transfer your funds freely to your overseas account.

So, this was all about the FCNR (B) fixed deposit account. Moving ahead, let's know the key features of this account.

Key Features of an FCNR (B) Fixed Deposit Account

Here are some of the key features of the FCNR (B) fixed deposit account that make it the best investment option among NRIs:

• These accounts are term deposits and not savings accounts. Additionally, on these fixed deposits, premature withdrawal is allowed. However, interest on these accounts starts from the second year.
• With the transfer of funds from your NRE account, you can simply open this FCNR (B) fixed deposit account.
• Like the NRE account, the interest you earn in these accounts is completely tax-free in India.
• Apart from this, the principal amount of your account and the earned interest are fully repatriable. This means you can easily transfer this amount to your overseas bank account.
• Also, with this fixed deposit account, you can avail of the overdraft facility.
• No Income and wealth tax is applicable on these accounts.
• Safe custody of the deposit receipt and automatic renewal are also available in these accounts.
• Further, FCNR accounts offer NRIS with diversified investment portfolios and maintain a financial connection with India.

This was all about the key FCNR (B) account features. Moving further, let's know the eligibility criteria to open this account.

What Are the Eligibility Criteria to Open an FCNR (B) Account?

Only NRIs, Persons of Indian Origin (PIO), and Overseas Citizens of India (OCI) are eligible to open an FCNR (B) account. Considering this, under the FEMA Regulations, you will be considered an NRI if you fulfill the following criteria:

• You are living outside India for more than 182 days in a financial year. For instance, from April 2025 to March 2026. 
• With supported documents, you have shown an intent to live outside India for an uncertain time:
  • Planning to study abroad
  • Works on international ships
  • A resident Indian professional, before going overseas for employment

These are some of the eligibility criteria NRIs or other foreign individuals need to follow to open an FCNR (B) fixed deposit account. Moving ahead, let's know how to open an FCNR (B) fixed deposit account in India.

How to Open an FCNR (B) Fixed Deposit Account?

Follow the steps below to open an FCNR (B) fixed deposit account:

• Look for the bank that offers FCNR accounts to NRIs.
• Select your preferred foreign currency and deposit tenure.
• Fill out the application for either online or offline, as per your convenience.
• Submit the required documents. It includes your PAN card copy, passport copy, residency status proof (for PIO/ OCI), and Indian and overseas address proof.
• Activate your FCNR (B) fixed deposit account and enjoy the tax benefits by simply managing your foreign funds.

So, this is how, in just five simple steps, NRIs can open an FCNR (B) fixed deposit account in India. Moving further, let's know how these accounts are different from an NRE and an NRO account.

How FCNR (B) Account Different from an NRE and NRO Account?

Here is how an FCNR (B) fixed deposit account is different from an NRE and NRO account:

So, this is how the FCNR (B) fixed deposit account is different from the NRE and NRO Accounts. Moving ahead, let's know the rules for premature withdrawal of these accounts.

What Are the Rules for Premature Withdrawal in FCNR (B) Fixed Deposit Account?

The rules for premature withdrawal in FCNR (B) fixed deposit account are as follows:

• Interest is paid after the completion of one year. Before that, no interest is paid on the deposited amount.
• After completion of one year, the payable interest rate on these deposits will be subject penalty of 1%. Here, the interest calculated as per the period deposit was held.
• As per the Reserve Bank of India (RBI) guidelines, banks have the right to impose a penalty on premature withdrawal. However, to do so, banks need to disclose this at the time of opening an FCNR (B) fixed deposit account.
• Partial withdrawal of the amount is not allowed. So, if you wish to withdraw the amount from the FCNR (B) account, you need to take out the full amount.

These are the premature withdrawal rules you need to follow in an FCNR (B) fixed deposit account.

Final Thoughts

Lastly, FCNR (B) fixed deposit accounts offer a flexible and secure way for NRIs to invest their overseas funds in foreign currencies. Additionally, easy repatriation and tax-free interest are also the key benefits of FCNR (B) fixed deposit accounts for NRIs. Also, NRIs can use this account as collateral for loans. In short FCNR account is a smart tool for NRIs seeking to grow and maintain their wealth in India.

Further, if you need more guidance or assistance in opening an FCNR bank account in India, Connect with Savetaxs. We have a team of experts who will solve all your doubts about the account. Additionally, help of simply open this account without any effort.