FCNR Deposits Explained: How to Secure the Best Deposit Rates

For non-resident Indians (NRIs), investing their overseas earnings is crucial to secure optimal returns. One attractive investment option is the Foreign Currency Non-Resident (FCNR) deposit account. This savings account allows NRIs to deposit funds in preferred foreign currencies like the US dollar, Euro, Pound sterling, Australian dollar, or Singapore dollar. 

What is an FCNR Deposit Account?

An FCNR account is a term deposit account maintained in foreign currency for NRIs and Persons of Indian Origin (PIOs). It offers fixed deposit facilities in foreign currencies for 1 to 5-year tenure periods. Leading banks in India provide competitive interest rates on FCNR deposits, making them a lucrative investment choice.

Key Benefits of Opening an FCNR Account

There are several advantages of parking your money in an FCNR deposit:

• It protects your money from exchange rate fluctuations as funds are held in the currency of your choice
• You can earn an attractive rate of interest on deposits based on the foreign currency
• Both the principal and interest earned are fully repatriable abroad
• Interest earned is tax-free in India, ensuring higher post-tax returns
• Deposits get auto-renewed on maturity for your convenience

Who Can Open an FCNR Account?

The eligibility criteria to open this type of savings bank account are:

• Non-Resident Indians (NRIs)
• Persons of Indian Origin (PIOs)
• Overseas Citizens of India (OCIs)
• Indian seafarers on international vessels
• Indian employees working with oil rig companies overseas

Interest Rates Offered on FCNR Deposits 

Banks offer interest rates on FCNR accounts based on factors like:

• Foreign currency type
• Tenure period 
• Deposit amount

Generally, interest rates are higher for longer tenure deposits above 1 year. Also, bulk deposits above ₹1 million may fetch slightly lower interest rates.

Here are the latest indicative interest rates offered on FCNR deposits by leading banks:

USD Deposits

Tenure	Up to $1 million	Above $1 million
1 – 2 years	5.50%	5.50%
2 – 3 years	5.00%	4.50%
3 – 4 years	4.50%	4.00%
4 – 5 years	4.75%	4.00%

EUR Deposits

Tenure	Up to €1 million
1 – 2 years	3.05%
2 – 3 years	2.65%

GBP Deposits

Tenure	Up to £1 million
1 – 2 years	4.45%

Interest rates vary across currency types and tenures. Compare rates across banks to find the highest-paying FCNR account.

Summing Up

For NRIs, investing overseas income in an FCNR account is prudent. It not only protects against currency fluctuations but also offers attractive returns. Evaluate interest rates across tenures and currencies to find the best FCNR account that aligns with your financial needs. Capitalise on this safe and rewarding investment option by parking funds in an FCNR today.