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Thursday, October 6, 2016

TOP NRI Investments in India - FCNR deposits

Dear NRI and PIO investors, get more tax free return from fixed income options in India
TOP NRI Investments in India - FCNR deposits

With dwindling interest rates globally, it has become impossible to earn any interest in the fixed income category, however, #NRI investors have various options available back in their own country for earning a good fixed return on their investments. There are options of NRE, NRO accounts for savings, fixed deposits and recurring deposits, which are in the indian currency, #FCNR is one more option available which offers lower interest compared to #NRE, #NRO accounts, however, protects the investor from currency fluctuation risk.    

What is an #FCNR Deposit?
FCNR stands or Foreign currency Non-resident bank account. Currently it is available in USD, British Pound, Euro, Japanese Yen, AUD and CAD. This account is actually a short term fixed deposit with tenure 1-5 years. The major booster for this is, apart from NRIs, Persons of Indian Origins as well can avail this facility. The interest earned in this account is not taxable in India.

Documents required for FCNR account
Copy of passport and visa, overseas bank statement, overseas electricity/telephone bill

Premature Withdrawal
There could be a penalty charge of 1%, withdrawal within 1 year would lead to non-payment of interest.  


Interest Rates for FCNR Deposits
With many countries including US, keeping interest rate near zero, FCNR acts like a bonus element. The chart for FCNR deposits is as below -  

FCNR interest rate chart

Negative bond yield in countires – Japan, Italy, France, Germany piling on bonds with negative yield, shrinking the investors’ funds. Major countries also have kept the interest rate near zero, making it impossible to earn any interest income.

There is been news of negative yield for last three months in many major countries worldwide, Negative-Yielding Bonds Jump to Almost $12 Trillion - Bloomberg,

Dollar rupee movement doesn’t bear any consequence to the investor

FCNR accountholders doesn’t have the risk of currency fluctuation as the account remains in the original currency of deposit and the accountholder earns at fixed rate of interest.  So, if dollar appreciate or depreciate against rupee in the said tenure, doesn’t hold any bearing to the investors. 

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