Tuesday, August 22, 2017

Does it Right time to Invest in FCNR deposits on Indian Banks- SBI, ICICI, AXIS bank, Kotak

With Rupee falling every day and touching a new all-time low of almost $1 to Rs 65, many of NRI Indians are asking this question, is it a right time to transfer money to India or is it the right time to invest in FCNR deposits on Indian banks. If you have transferred dollars to India recently, many are just a fortnight ago, you might be regretting your decision to miss this increase in exchange rates. But there are many Indians, which are also thinking to take advantage of both increase in exchange rates as well as high-interest rates offered by Indian banks. Since NRE fixed deposits are not that attractive, due to recent fall in rupees values, in fact, you would earn more than FD if you keep your money in dollar itself, but FCNR (Foreign Currency Non Resident) deposits are unique, it keep money in the foreign currency itself e.g. in USD, GBP, SGD, AUD or JPY, depending upon your FCNR deposit currency.

So you not only keep your money in dollars to take advantage of the increase in exchange rates but also earn higher interest rates ranging up to 5 to 6% depending upon currency and tenure of deposit. Opening FCNR deposit looks a wise decision to me because local banks offer very fewer interest rates, mostly around 1 to 2% of foreign currency, while Indian banks are offering a lot more than that.

In order to open FCNR deposit, you need either NRE Saving account or NRO Saving account. Since different banks offer different interest rates and not all offer FCNR deposit in the currency of your choice e.g. only a few banks like Axis bank offer FCNR deposit on SGD. But rest assured, almost all banks offer FCNR deposits in US dollars. You must also check all the rules related to opening and closing FCNR deposit, transferring money from abroad and even sending money back to your foreign bank account.

FCNR Deposit - Thinks to know

Following are some rules related to FCNR deposits with SBI, which provides FCNR deposits in USD, GBP (British Pound),  EURO, CAD (Canadian dollars), AUD (Australian dollars), JPY (Japanese yen), NZD (NewZeland dollars), CHF, DKK and SEK.

1. The deposit can be made for minimum 1 year and a maximum of 5 years of tenure. You will get higher rates for locking your money for a longer duration, but keep in mind that exchange rate may not be this positive in a longer term, so decide your tenure based upon your need of money. I think locking it for the short term up to 1 to 2 years is not a bad option.

2. FCNR deposits in State bank of India can be only opened by NRI or along with any NRI. Residents can not open this account by their own, even if they are getting foreign currency from their kin.

3. Minimum deposit amount for opening FCNR deposit is USD 1000 or equivalent in other foreign currency.

4. Beware, premature withdrawal of FCNR deposit is subject to a penal interest rate of 1%.

5. Good thing is that interest earned on FCNR accounts are tax-free in India. You don't need to pay any income tax on interest earned by your FCNR deposit.

6. Another good thing is that both principle amount and interest earned are payable in foreign currency, which means no exchange loss on principle or interest. Though by locking your money for a tenure, you effectively take a view on exchange rates, if your aim is to transfer money to India

7. You can even take loans both on Rupees and on foreign currencies against your FCNR deposit, certain SBI branches offer foreign currency loan against FCNR deposit.

So what are you waiting for, explore FCNR deposits from different banks? If you are thinking to open FCNR deposit on USD than almost all banks offer that but only limited banks offer FCNR deposit on other popular currencies like SGD. By the way, do your own research before investing any money, though it seems FCNR good option, it might not be best because of current volatility and your ultimate goal.

For FCNR deposit rates from SBI, See this link www.sbi.co.in/webfiles/uploads/files/1277812934866_NRI_AC_OPENING_FORM1.pdf

FCNR deposit information and interest rates from ICICI bank http://www.icicibank.com/nri-banking/bankAccounts/fcnr_fixed_accounts.html

For FCNR fixed deposit rates from Axis bank India see http://www.axisbank.com/nri/others/deposits/fcnr-deposit/comments.aspx

See this link for more information on FCNR term deposit and interest rates from Kotak Mahindra bank

See this link for YES Bank FCNR fixed deposit rates and rules http://www.yesbank.in/branch-banking/global-indian-banking-nri/fixed-deposit/fcnr-fixed-deposits.html

Happy Investing.


  1. You should hold your US dollars until dust settles, it may go down to 70 or 75 in near term, if you transfer money now, you may regret after one month. hold and wait, this should be strategy for now.

  2. I dont see any risk if you make FCNR deposits in USD or other currencies if you happen to live in those countries.

    If you convert to INR, then its not a good time.

  3. Hello there, Do you know any bank in India, which provides FCNR fixed deposit in Singapore Dollars SGD? I am thinking to open FCNR accounts but couldn't do that because HDFC NRE accounts doesn't support SGD. They support USD, CAD, JPY, EURO and even GBP but not SGD. Since banks are offering are more interest rates now days on FCNR term deposit then ever, I want to park some money on SGD term deposits.

    On another direction, what if I convert SGD to USD and then open FCNR deposit on USD? Do you think it would be wise decision, given I will lose some money on currency conversion?

    1. You are right, not every Indian bank allows you to open FCNR deposit in SGD ( Singapore Dollars) or HKD ( HongKong Dollars), but there are quite a few of them which do. Here is a list of Indian banks to open SGD FCNR fixed deposits :

      1) YES Bank allows you to maintain your deposit in any of these currencies: USD, GBP, EUR, JPY, AUD, CAD, SGD & HKD
      2) ICICI Bank allows FCNR term deposit on USD, GBP, EUR, JPY, CAD, AUD, SGD, HKD and CHF

      YES Banks looks like provide best FCNR Rates at the moment.

    2. Development Bank of Singapore, or DBS bank also offers FCNR fixed deposit in Singapore dollars. Though it need minimum deposit amount as 1000 USD, on the other hand, ICICI just require 2000 SGD, YES bank need only 1000 SGD to open a FCNR term deposit. DBS, ICICI and YES Bank also allow you to open fixed deposit in not so popular currency like HongKong dollars HKD, and CHF.

  4. Does investing money in fixed deposit is right decision, given high inflation in India and rising cost of living, rising cost of properties and everything? wouldn't value of money will depreciate more than the interest rate it adds by fixed deposits?

  5. If one from US has money in India already in NRE account, does it make sense to convert to FCNR since any high rupee interest in rupee account is offset by exchange rate loss?