A Guide to FCNR Deposits: Should NRIs Invest in Foreign Currency FDs?

Are you a Non-Resident Indian (NRI) exploring the best investment options in India? Foreign Currency Non-Resident Account deposits are a compelling choice. With FCNR fixed deposits, you can hold your savings in foreign currencies while enjoying great interest rates and tax benefits.

Here’s what we’ll cover in this article:

• FCNR Deposits: Benefits and features
• Points to consider before investing in FCNR deposits

What are FCNR Deposits?

FCNR deposits are term deposits created by Indian banks for NRIs, where you can save your earnings in a foreign currency of your choice. You can choose to save your money in US dollars, Pounds, Euros, etc. Since the principal amount and interest are both maintained in your choice of currency, your funds are protected from exchange rate fluctuations.

Know the Important Features of FCNR Deposits

FCNR deposits have some incredible features, which make them a great investment choice. These include:

Multiple Currency Options

Choose the currency in which you want your funds to be saved. When opening an FCNR with Kotak Mahindra, denominate your money in USD, GBP, EURO, AUD, and SGD currencies.

Varied Tenure Choices

Discover the flexibility in savings by opting for an FCNR account. Kotak gives you a choice to save your money for a tenure of 1 to 5 years.

Attractive Interest Rates

Do you know that interest rates on FCNR are regulated by the Reserve Bank of India (RBI)? In fact, it has allowed banks to offer a higher interest rate to attract an inflow of foreign currency.

Amazing Tax Benefits

The one thing that makes FCNR deposits attractive for NRIs is that they are exempted from any tax deductions. The interest you earn from your deposit is tax-free.

Completely Repatriable

The principal amount and the interest you earn on your FCNR deposit are 100% repatriable. This means you can transfer them to your resident country at the time of maturity without any restrictions.

Save in Multiple currencies

You can hold simultaneously hold FCNR deposits in multiple currencies, as long as they are offered by the bank.

Liquidity in times of emergency

Kotak allows you to take a loan over and above Rs 50000 against your FCNR deposit for a period of 1 year or more.

Considerations Before Investing in FCNR Deposits

Investing in foreign currency deposits comes with a lot of benefits. But consider these pointers before you open an FCNR deposit:

Currency Selection

While you can save your money in any currency, choose one that aligns with your financial goals. Also, check if the interest rates offered are favorable for the currency of your choice.

Fluctuations in FCNR Fixed Deposit Interest Rates

The interest rates offered for FCNR deposits are influenced by global market conditions and RBI policies at the time of booking. However, once booked, the interest rate for that deposit remains fixed for the entire tenure.

Add a Nominee

You should always add a family member or dependable as a nominee for your FCNR deposit. This ensures that your loved ones are secure in case of your demise.

Learn more about how you can open an FCNR Deposit in detail here.

Summing Up

FCNR deposits are a secure and tax-efficient investment avenue for NRIs. Kotak Mahindra offers competitive interest rates and allows you to hold deposits in foreign currencies, eliminating the risk of exchange rate fluctuations. So, open an FCNR deposit today and choose a currency that will bring you the maximum benefits.

This Article is for information purpose only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. The Bank makes no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Article. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from the Bank. The Bank, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein. Mutual Fund investments are subject to market risks read all scheme related documents carefully before investing