What is an FCNR(B) Deposit?
FCNR stands for Foreign Currency Non-Resident (Bank). It's a term deposit held in India but denominated in a foreign currency. Unlike NRE FDs (which are in INR), FCNR deposits stay in your chosen currency throughout — you put in USD 10,000 and get back USD 10,000 + interest at maturity, regardless of what USD/INR has done in the interim.
FCNR(B) is the current variant (the old FCNR-A scheme was discontinued). All references to "FCNR" now mean FCNR(B).
Eligible Currencies
RBI permits FCNR deposits in the following currencies:
- US Dollar (USD)
- British Pound Sterling (GBP)
- Euro (EUR)
- Japanese Yen (JPY)
- Australian Dollar (AUD)
- Canadian Dollar (CAD)
- Swiss Franc (CHF)
- Singapore Dollar (SGD)
- Hong Kong Dollar (HKD)
- Swedish Krona (SEK)
Notably, AED (UAE Dirham) is not eligible for FCNR deposits — UAE NRIs must convert AED to USD first (since AED is pegged to USD at 3.6725, the exchange risk is minimal).
FCNR Interest Rates (Indicative, Mid-2026)
FCNR rates are set by individual banks within RBI's ceiling. Rates change frequently — check directly with your bank before opening.
| Currency | 1 Year | 2 Years | 3 Years | 5 Years |
|---|---|---|---|---|
| USD | 4.2–4.8% | 4.0–4.6% | 3.8–4.4% | 3.5–4.0% |
| GBP | 3.8–4.3% | 3.6–4.1% | 3.4–3.9% | 3.0–3.6% |
| EUR | 2.5–3.0% | 2.3–2.8% | 2.0–2.6% | 1.8–2.3% |
| AUD | 3.5–4.0% | 3.3–3.8% | 3.0–3.6% | 2.8–3.2% |
FCNR vs NRE FD: Key Differences
| FCNR Deposit | NRE Fixed Deposit | |
|---|---|---|
| Currency | Foreign (USD, GBP, etc.) | Indian Rupees (INR) |
| Currency risk | None (deposit + interest in foreign currency) | Full INR exposure |
| Interest rate (USD) | 4.2–4.8% p.a. | 7.0–7.5% p.a. (in INR) |
| Tax in India | Fully exempt | Fully exempt |
| Repatriation | Freely repatriable | Freely repatriable |
| Minimum tenure | 1 year | 1 year |
| Maximum tenure | 5 years | 10 years (bank-specific) |
| Joint accounts | With another NRI | With another NRI or resident |
| Premature closure | Allowed (interest penalty) | Allowed (interest penalty) |
When Should You Choose FCNR Over NRE FD?
Choose FCNR when:
- You plan to use the money abroad (not convert to INR at maturity)
- You believe INR will depreciate significantly against your currency
- You have USD/GBP savings you haven't converted to INR yet
- You are uncertain about your return date to India and want flexibility
- You need a higher-yielding alternative to US Treasuries or UK gilts
Choose NRE FD when:
- You plan to use the maturity amount in India
- You want the higher INR interest rate (7%+ vs 4–5% for FCNR)
- You have regular INR expenses in India (parents, EMIs, etc.)
Tax Treatment of FCNR Interest
FCNR interest is fully exempt from Indian income tax under Section 10(4)(ii) of the Income Tax Act, as long as the depositor is a non-resident at the time of receipt of interest. This exemption continues even if you become a resident (RNOR) on return to India, until you actually convert to full Resident status.
However, in your country of residence (UK, USA, Canada, etc.), the interest is taxable under local tax rules. Use DTAA provisions and foreign tax credits appropriately.
How to Open an FCNR Account
- You must have an existing NRE savings account with the bank
- FCNR deposits can be opened by remitting foreign currency from abroad, or by debiting your existing NRE account
- Most banks offer FCNR online through NRI banking portals — ICICI Bank, HDFC Bank, Axis Bank, SBI, Federal Bank all offer online opening
- Minimum deposit varies: typically USD 1,000 or equivalent
- Compounding: interest is typically credited annually or at maturity; check individual bank terms
Premature Closure and Loan Against FCNR
FCNR deposits can be broken prematurely (with an interest penalty of 0.5–1% typically). You can also take an INR loan against an FCNR deposit — up to 90% of the deposit value — useful if you need funds in India without breaking the deposit. The loan is in INR; you repay in INR; the FCNR continues earning interest in foreign currency.