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News: The Reserve Bank of India has decided to increase the interest rate ceilings on Foreign Currency Non-Resident (Banks) Account deposits to support foreign inflows into the country. Foreign Currency Non-Resident (Banks) Deposits
About Foreign Currency Non-Resident (Banks) Deposits
- It is a deposit scheme that enables the Non-Resident Indians (NRIs), Persons of Indian Origin (PIOs) and Overseas Citizens of India (OCIs) to invest their foreign earnings in Indian fixed deposit accounts.
- The deposit is held in foreign currencies like the US dollar, British pound sterling, Australian dollar, Euro and Canadian dollar.
- The FCNR deposit can be held as a term deposit, ranging from 1 year to 5 years.
- The interest rate ceiling for the FCNR deposits is set by the Reserve Bank of India and the individual banks set the interest rate within that ceiling.
Benefits of the FCNR(B) Deposits
- It helps NRIs to avoid the risk of currency fluctuations as the principal and interest are held in foreign currency, rather than the Indian Rupee.
- FCNR deposits tend to offer higher interest rates than those offered on regular savings accounts, making them an attractive investment option.
- The principal and interest are freely repatriable, allowing NRIs to transfer the funds to their residential country.
- The interest on FCNR deposits is not taxable in India.
