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Key Takeaways: How different are Foreign Currency Non-Resident (FCNR) (A) and (B) accounts? And what is the significance of holding an FCNR (B) account? These are two questions the article will answer for you.
An FCNR account is a type of term deposit that NRIs can hold in India in a foreign currency.
What is the difference between an FCNR (A) and FCNR (B) account? For starters, the FCNR (A) account does not exist any more. It was replaced by the FCNR (B) account in 1993. All FCNR accounts today are FCNR (B) accounts.
FCNR (A) was introduced in 1975 to encourage NRI deposits. The Reserve Bank of India (RBI) guaranteed the exchange rate prevalent at the time of a deposit to eliminate risk to depositors. In 1993, the apex bank introduced FCNR (B), without exchange rate guarantee, to replace FCNR (A) [1].
Benefits of an FCNR (B) Account:
Now that the difference between FCNR (A) and FCNR (B) accounts is clear let's look at the features and benefits of FCNR (B) accounts. Any Non-Resident Indian – NRI and PIO cardholder – can open an FCNR (B) account. It is a term deposit with a stipulated maturity date and can be held in a foreign currency.
The main benefit of an FCNR (B) account is that the principal amount and interest amount are tax-free and fully repatriable. Since the account is denominated in a foreign currency, you are not exposed to the risk of exchange rate fluctuations. Banks offer competitive interest rates on these deposits to NRIs.
Features of an FCNR (B) Account
Here are the currency options available to open an FCNR (B) account:
Documents Required to open an FCNR (B) account:
Permissible Debits from the FCNR (B) Deposit:
You can debit your FCNR (B) deposit for remittances outside India, local disbursements (within India), for making investments in India and transferring funds to other NRE or FCNR (B) Accounts.
Opening an FCNR Deposit:
The process of opening an FCNR (B) deposit is both convenient and straightforward. You can easily open an FCNR (B) account online through your bank's internet banking portal. However, you need to open an NRE or NRO account before you can create an FCNR (B) deposit.
Transferring Funds:
You can transfer funds into your FCNR (B) account through any of the following methods:
Final Note: The difference between an FCNR (A) and FCNR (B) account is that the latter replaced the former in 1993. An FCNR (B) account allows you to deposit earnings from anywhere in the world and earn competitive tax-free interest on them with full repatriability.
It is always great to have a tax-saving investment option in India. With DBS Treasures, you can open an FCNR deposit at your convenience. Apply Now!
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