What is FCNR account?

A FCNR account is an account for Indian Residents living outside India. The FCNR account full form is Foreign Currency Non-Residential Account. So, in simple words fixed deposit accounts offered to NRI (Non-Resident Indians), NRE (Non-Resident External), PIO (Person of Indian Origin) are called FCNR accounts. This is what is FCNR account.

An FCNR account is a safe way to invest and you don't need to pay any tax if you are investing in an FCNR account. The other important point you should note is that by investing in an FCNR account you will get good returns on interest. India provides better returns for FCNR accounts than other countries. 

To open an FCNR account you need to go to your bank or you can avail this service remotely.

Before applying for an FCNR account you may want to know about the advantages and disadvantages for the same. 

So, let me share with you the advantages and disadvantages of FCNR accounts.

Advantages: 

• You can invest the amount in the same foreign currency insulating it from forex rate fluctuation. 

• Since there is a competitive interest rate, you receive decent appreciation.

• The principal and the interest you earn are tax-free.

• You can repatriate the principal and interest amount.

• You can avail of this service in leading foreign currencies such as  US Dollars, Pound Sterling, the Euro, Japanese Yen, Australian Dollars, Canadian Dollars, Swiss Francs, Singapore Dollars and Hong Kong Dollars.

• You can access your FCNR deposits through mobile or internet banking.

• You need to select the tenures between 1 to 5 years.

Disadvantages:

• If you open an FCNR account from a weak bank you might not be able to get back the amount after maturity. So, you need to choose your bank wisely.

• During a financial meltdown, the bank may not repatriate the funds.

• You won't receive any interest amount if you withdraw your deposits within a year.

• You can avail FCNR accounts for term deposits only.

• If you avail of premature withdrawal, you will be charged a penalty fee.

I hope you have learnt

what is FCNR account in detail by now. You can check out different banks and their interest rates while deciding on opening the FCNR account.

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