Indian banks offer a wide array of financial products to cater to the diverse needs of NRIs around the globe. One of the key product offerings for this international clientele is Foreign Currency Non-Resident (FCNR) Deposits. Similar to NRI GIFT City FDs, a key feature of these deposits is that they are denominated in foreign currencies such as US Dollar (USD), British Pound (GBP) and Euro (EUR). This allows you to earn interest on these deposits with Indian banks without having to worry about the risk of fluctuations in the value of foreign currency against the Indian Rupee (INR). Here, we’ll take you through the features and benefits of FCNR deposits in detail and provide the latest interest rates offered by top Indian banks across various international currencies.
What are FCNR Deposits (Foreign Currency Non-Resident Deposits)?
FCNR deposits are a special kind of term deposit that allow NRIs to make a bank deposit in India in a foreign currency. Typically this foreign currency would be the one in which you earn your foreign income (such as USD, GBP, EUR, etc). These term deposits held in foreign currency come with unique features and benefits.
Key Features of FCNR Deposits
- FCNR deposits can be offered in most major foreign currencies, such as the US Dollar (USD), British Pound (GBP), Euro (EUR), UAE Dirham (AED), Singapore Dollar (SGD), Canadian Dollar (CAD), and Australian Dollar (AUD). The currency options available would vary between various banks.
- There is minimal currency exchange rate risk from depreciation in the value of the Indian Rupee, as the deposits are held in a foreign currency.
- The tenure of FCNR deposits ranges between a minimum of 1 year to a maximum of 5 years as per RBI regulations.
- The interest rates on FCNR deposits are typically linked to the Overnight Alternative Reference Rate (ARR) for the respective currency), and may change based on rate notifications from the Reserve Bank of India from time to time. This makes FCNR deposit rates globally competitive. The interest rates vary from bank to bank depending on the currency and the deposit duration.
- The interest earned on FCNR deposits is tax-free in India.
- FCNR deposits are fully repatriable, including the principal and interest. That means you can transfer it back to your country of residence without any restrictions.
- You can transfer money freely between your FCNR and NRE accounts without any prior approval from the RBI.
- FCNR deposits also offer liquidity with a premature withdrawal facility. This would typically, however, come with an associated penalty on the interest earned from the deposit, though the principal amount usually stays intact. The specific terms for premature withdrawal may vary from bank to bank.
- Indian Rupees or foreign currency loans can usually be availed against FCNR deposits.
- FCNR deposit accounts can be opened individually or jointly with other Non-Resident Indians, Persons of Indian Origin (PIO), or Overseas Citizens of India (OCI).
Tax Implications of FCNR Deposits
One of the most attractive features of FCNR deposits is their tax efficiency. Interest from FCNR deposits is completely tax-free in India as long as you qualify as a non-resident (NRI). Also, the maturity proceeds are repatriable to your country of residence without any restrictions. With this major tax benefit, you can benefit from India's stable banking environment and competitive interest rates.
However, interest income from FCNR deposits may be taxable in your country of residence. Make sure to clarify the compliance requirements with a tax professional, including the applicability of related provisions available under the DTAA (Double Taxation Avoidance Agreement) between both countries.
Current FCNR Deposit Rates
Interest rates offered by banks are subject to change from time to time. You can refer to the banks' official websites to learn the current applicable rates. The FCNR rates from various Indian banks published here are current as of the publishing of this blog on Sept 4, 2024:
Summary of USD interest rates for common FCNR tenures across major Indian banks
Bank | 1 year | 2 years | 3 years | 4 years | 5 years |
SBI | 5.70% | 4.55% | 4.30% | 3.85% | 3.90% |
Indian Overseas Bank | 5.75% | 3.20% | 3.15% | 3.15% | 3.15% |
Indian Bank | 5.90% | 4.30% | 3.95% | 3.95% | 3.95% |
Bank of Baroda | 5.50% | 3.95% | 3.80% | 3.85% | 3.90% |
HDFC Bank | 4.65% | 3.90% | 3.70% | 3.35% | 3.35% |
ICICI Bank | 5.15% | 4.00% | 3.65% | 3.30% | 3.30% |
Axis Bank | 5.35% | 4.50% | 4.30% | 4.30% | 4.30% |
Kotak Mahindra Bank | 5.25% | 4.55% | 4.00% | 3.75% | 3.50% |
IndusInd Bank | 5.60% | 4.80% | 4.65% | 4.55% | 4.55% |
YES Bank | 6.00% | 5.15% | 4.80% | 4.75% | 4.75% |
HSBC Bank | 4.25% | 3.75% | 3.25% | - | - |
Indian Public Sector Banks
State Bank of India
SBI offers the benefit of premature withdrawal without any penalty. However, no interest is paid on withdrawals within a year. These rates are current as on Sept 4, 2024. Current rates can be viewed here.
Deposit Tenure | FCNR (B) Deposit Rates for Different Currencies in % | |||||
USD | GBP | EURO | CAD | AUD | JPY | |
1 year | 5.70 | 5.10 | 4.00 | 4.20 | 4.50 | 0.15 |
1 year < 2 years | 5.70 | 5.10 | 4.00 | 4.20 | 4.50 | 0.15 |
2 years < 3 years | 4.55 | 5.00 | 1.50 | 3.80 | 4.40 | 0.15 |
3 years < 4 years | 4.30 | 4.00 | 1.50 | 3.55 | 4.30 | 0.15 |
4 years < 5 years | 3.85 | 4.00 | 1.50 | 3.60 | 4.20 | 0.05 |
5 years | 3.90 | 3.90 | 1.50 | 3.65 | 4.10 | 0.05 |
Indian Overseas Bank
Indian Overseas Bank allows premature closure of FCNR deposits. However, interest payable will be 1% below the applicable rate for the tenure. No interest is paid on withdrawals within a year. These rates are current as on Sept 4, 2024. Current rates can be viewed here.
Deposit Tenure | FCNR (B) Deposit Rates for Different Currencies in % | ||||||||
USD | GBP | EUR | JPY | CAD | AUD | CHF | NZD | SGD | |
1 year | 5.75 | - | - | - | - | - | - | - | - |
> 1 year < 2 years | 5.75 | 5.00 | 2.50 | 0.03 | 0.50 | 0.70 | 0.00 | 1.00 | 0.42 |
2 years < 3 years | 3.20 | 2.10 | 0.15 | 0.05 | 1.60 | 1.00 | 0.00 | 1.20 | 0.89 |
3 years < 4 years | 3.15 | 2.15 | 0.15 | 0.05 | 1.80 | 1.25 | 0.02 | 1.40 | 1.09 |
4 years < 5 years | 3.15 | 2.20 | 0.15 | 0.05 | 1.90 | 1.55 | 0.02 | 1.50 | 1.23 |
5 years | 3.15 | 2.25 | 0.15 | 0.05 | 1.95 | 1.85 | 0.02 | 1.60 | 1.39 |
Indian Bank
Indian Bank offers the benefit of premature withdrawal without any penalty. However, no interest is paid on withdrawals within a year. These rates are current as on Sept 4, 2024. Current rates can be viewed here.
Deposit Tenure | FCNR (B) Deposit Rates for Different Currencies in % | |||||||
USD | GBP | EUR | JPY | CAD | AUD | CHF | SGD | |
1 year < 2 years | 5.90 | 4.95 | 2.00 | 0.11 | 4.50 | 4.40 | 0.00 | 3.95 |
2 years < 3 years | 4.30 | 3.20 | 1.90 | 0.13 | 4.10 | 3.50 | 0.01 | 0.40 |
3 years < 4 years | 3.95 | 3.25 | 1.60 | 0.12 | 3.90 | 2.05 | 0.02 | 0.49 |
4 years < 5 years | 3.95 | 3.25 | 1.60 | 0.13 | 3.70 | 2.30 | 0.03 | 0.55 |
5 years | 3.95 | 3.25 | 1.65 | 0.14 | 3.50 | 2.45 | 0.05 | 0.61 |
Bank of Baroda
Bank of Baroda allows premature closure of FCNR deposits. However, interest payable will be 1% below the applicable rate for the tenure. No interest is payable for withdrawals within a year. These rates are current as on Sept 4, 2024. Current rates can be viewed here.
Deposit Tenure | FCNR (B) Deposit Rates for Different Currencies in % | ||||
< USD 200,000 | GBP | EUR | AUD | CAD | |
1 year | 5.50 | 5.00 | - | - | - |
> 1 year < 2 years | 5.50 | 4.75 | 1.50 | 3.60 | 4.50 |
2 years < 3 years | 3.95 | 2.35 | 1.50 | 3.50 | 4.10 |
3 years < 4 years | 3.80 | 2.45 | 1.50 | 3.00 | 3.85 |
4 years < 5 years | 3.85 | 2.45 | 1.50 | 3.00 | 3.90 |
5 years | 3.90 | 2.45 | 1.50 | 3.00 | 3.95 |
Private Sector Banks
HDFC Bank
HDFC Bank allows premature withdrawal of FCNR deposits without any penalty. However, no interest is paid on withdrawals within a year. These rates are current as on Sept 4, 2024. Current rates can be viewed here.
Deposit Tenure | FCNR (B) Deposit Rates for Different Currencies in % | |||||
< USD100,000 | GBP | EUR | JPY | AUD | CAD | |
1 year < 2 years | 4.65 | 4.40 | 2.65 | 0.01 | 4.10 | 3.45 |
2 years < 3 years | 3.90 | - | - | - | 3.80 | 3.05 |
3 years < 4 years | 3.70 | - | - | - | 3.70 | 2.85 |
4 years < 5 years | 3.35 | - | - | - | 3.65 | 2.70 |
5 years | 3.35 | - | - | - | 3.65 | 2.70 |
ICICI Bank
ICICI Bank offers premature withdrawal of FCNR deposits without any penalty. However, no interest is paid on withdrawals within a year. These rates are current as on Sept 4, 2024. Current rates can be viewed here.
Deposit Tenure | FCNR (B) Deposit Rates for Different Currencies in % | ||||
USD | SGD | AUD | GBP | CAD | |
1 year < 2 years | 5.15 | 3.50 | 4.40 | 4.75 | 4.00 |
2 years < 3 years | 4.00 | 2.75 | 3.75 | 4.00 | 3.30 |
3 years < 4 years | 3.65 | - | - | - | - |
4 years < 5 years | 3.30 | - | - | - | - |
5 years | 3.30 | - | - | - | - |
Axis Bank
Axis Bank offers premature withdrawal of FCNR deposits. No penalty is applied for premature closure of deposits below USD 1mn, or similar such specified amount for each currency. For deposits above such threshold, a penalty rate of 1% on the applicable rate of interest would be applied. No interest is paid on withdrawals within a year. These rates are current as on Sept 4, 2024. Current rates can be viewed here.
Deposit Tenure | FCNR (B) Deposit Rates for Different Currencies in % | |||||
< USD 1mn | GBP | EUR | AUD | CAD | JPY | |
1 year < 2 years | 5.35 | 5.00 | 3.35 | 4.40 | 4.65 | 0.01 |
2 years < 3 years | 4.50 | 4.00 | 0.01 | 3.75 | 3.30 | 0.01 |
3 years < 4 years | 4.30 | 0.01 | 0.01 | 3.60 | 2.90 | 0.01 |
4 years < 5 years | 4.30 | 0.01 | 0.01 | 3.55 | 2.70 | 0.01 |
5 years | 4.30 | 0.01 | 0.01 | 3.55 | 2.70 | 0.01 |
Kotak Mahindra Bank
Kotak Mahindra Bank allows premature withdrawal of FCNR deposits. No interest is paid on withdrawals within a year. These rates are current as on Sept 4, 2024. Current rates can be viewed here. Premature withdrawal penalties are applied to the applicable interest rate as below:
Premat Penalty | < USD 0.5mn | GBP | EUR | JPY | AUD | SGD |
0.25% | 0.25% | 0.00% | 0.00% | 0.25% | 0.10% |
Deposit Tenure | FCNR (B) Deposit Rates for Different Currencies in % | ||||
< USD 0.5mn | GBP | EUR | AUD | SGD | |
1 year < 2 years | 5.25 | 5.40 | 3.80 | 5.05 | 3.60 |
2 years < 3 years | 4.55 | 4.80 | 3.20 | 4.55 | 3.10 |
3 years < 4 years | 4.00 | 4.30 | 2.70 | 4.05 | - |
4 years < 5 years | 3.75 | - | - | - | - |
5 years | 3.50 | - | - | - | - |
IndusInd Bank
IndusInd Bank allows premature withdrawal of FCNR deposits. Premature withdrawal penalty of 0.25% is applied to the applicable interest rate. No interest is paid on withdrawals within a year. These rates are current as on Sept 4, 2024. Current rates can be viewed here.
Deposit Tenure | FCNR (B) Deposit Rates for Different Currencies in % | |||||
< USD 1mn | GBP | EUR | JPY | CAD | AUD | |
1 year < 2 years | 5.60 | 5.60 | 4.00 | - | 4.70 | 5.30 |
2 years < 3 years | 4.80 | 5.00 | 3.35 | 2.40 | 4.10 | 4.50 |
3 years < 4 years | 4.65 | 4.85 | 3.20 | - | 4.00 | 4.50 |
4 years < 5 years | 4.55 | 4.80 | 3.20 | - | 4.00 | 4.50 |
5 years | 4.55 | 4.80 | 3.20 | 2.30 | 4.00 | 4.50 |
YES Bank
YES Bank allows premature withdrawal of FCNR deposits. Premature withdrawal penalty of 0.05% is applied to the applicable interest rate. No interest is paid on withdrawals within a year. These rates are current as on Sept 4, 2024. Current rates can be viewed here.
Deposit Tenure | FCNR (B) Deposit Rates for Different Currencies in % | |||||||
< USD 1mn | GBP | EUR | JPY | CAD | AUD | HKD | SGD | |
1 year < 2 years | 6.00 | 5.65 | 4.10 | 2.15 | 4.60 | 4.75 | 3.00 | 4.05 |
2 years <3 years | 5.15 | 5.00 | 3.65 | 2.30 | 4.60 | 4.50 | 3.00 | 3.75 |
3 years < 4 years | 4.80 | 4.25 | 2.55 | 2.25 | 4.30 | 4.30 | 1.35 | 3.60 |
4 years < 5 years | 4.75 | 4.00 | 2.00 | 0.05 | 4.10 | 4.30 | 1.35 | 1.40 |
5 years | 4.75 | 4.00 | 2.00 | 2.20 | 4.00 | 4.30 | 1.35 | 1.40 |
Foreign Banks
HSBC Bank
HSBC offers FCNR deposits in 9 different currencies with a premature withdrawal clause. These rates are current as on Sept 4, 2024. Current rates can be viewed here.
Deposit Tenure | FCNR (B) Deposit Rates for Different Currencies in % | ||||||
USD | GBP | EUR | JPY | CAD | AUD | CHF | |
≥ 1 year < 2 years | 4.25 | 4.00 | 0.01 | 0.01 | 0.10 | 0.10 | 0.01 |
≥ 2 years < 3 years | 3.75 | 0.50 | 0.01 | 0.01 | 0.10 | 0.10 | 0.01 |
3 years | 3.25 | 0.50 | - | - | - | - | 0.01 |
Conclusion
By investing in FCNR deposits, NRIs can benefit from India's stable banking environment and higher interest rates on deposits than their country of residence, while at the same time protecting their investment against the risks of currency fluctuations. With the additional benefit of the interest being tax-free in India, FCNR deposits are an excellent choice for NRIs to grow their wealth.
