Investing your money to get returns is the best way to make it work for you. It becomes even more critical as a Non-resident Indian or Person-of Indian origin in a foreign land. You have many responsibilities of your expenses and family back home. A foreign currency non-resident account enables you to save with good returns.
It is a fixed deposit that you maintain in an Indian bank for your foreign earnings. It is easily manageable, just like a normal FD. It also has many benefits for you as an NRI. Understanding them is helpful to make the most of the FCNR account.
Look at some of them:
Multiple currency options: The Reserve Bank of India guidelines permit up to nine freely convertible currencies in the foreign currency account. You can deposit in the US Dollar, Euro, Pound sterling, Canadian Dollar, Australian Dollar, Japanese Yen, Swiss Franc, Singapore Dollar, Hong Kong Dollar and Danish Krone. It encourages the inclusion of all major countries.
Tax-exemption benefits: The interest earned through this account is not taxable in India. This is to avoid double taxation for income outside of India. It implies that you get a tax deduction from your employed country. This benefit is limited only until you are a non-resident Indian.
Loan provision: You can take a loan against your foreign currency accounts in the Indian or abroad denomination. These credits are for business or personal use. Banks allow you to take them from anywhere in the world. However, you might get subjected to conditions on the loan repayment and other factors. It is best to check the banks’ policies for the same before applying.
Flexible tenure: The duration of the deposit ranges between one to five years. It allows you to invest conveniently based on your financial goals and needs. It also does not have any limitation in terms of the minimum or maximum amount required for deposits. This enables you to start with minimal funds.
Earn fixed returns: You enjoy all the advantages of a regular fixed deposit in this account. You earn fixed returns on FCNR rates, which gets compounded on a half-yearly basis. This remains unchanged throughout your deposit tenure. The principal amount and interest are maintained in foreign currency. Hence, they do not get affected by fluctuating implications of exchange rates.
Ease in repatriation: Your deposit amount and interest earned on it are freely and fully repatriable. You submit a request for this by filling a form digitally or through the branch. Doing it online is the best option to get it quicker.