Earning in foreign currency offers you a lot of benefits. But when the time comes to convert the foreign currency into the local Indian currency, you might suffer financial loss, especially since the value of the rupee remains volatile even today. But there are various options which allows you to invest your foreign funds, without the worry about any currency risks. One of them includes the foreign currency non resident account. So why is this account the best option? Let us know more about this account to know why.
What is the FCNR account?
The foreign currency non resident account, also known as the FCNR account is a term deposit account. It can be opened and maintained by NRIs and PIOs in certain foreign currencies. Basically this account is not a savings accounts but a fixed deposit account.
What are the foreign currencies that can one maintain in this account?
Previously, this term deposit account could be allowed to hold six currencies. They included the US dollar, Pound Sterling (GBP), Euro, Japanese Yen, Australian dollar and Canadian dollar. However, as of October 2011, the RBI has allowed authorised dealer banks in India to accept the FCNR deposits in any permitted currency. Permitted currency is when a foreign currency can be freely converted into other forms of currency, some of which include Danish Krone, Swiss Frank and Swedish Krona among others.
What are the steps to open this account?
Even if you are settled abroad, you can open this account. You would only need to submit certain documents to open this account. Some of the documents include the account opening form with the signature verified by your overseas bank, notary public or the Indian embassy. You would also need to include passport photos, copies of your passport and visa which are duly attested. You will also need to submit proof of foreign address and an initial remittance. However, the document requirements may also vary between countries.
What is the process to transfer funds to this account?
This account has several criterias when it comes to transferring funds. One major criteria is that, the funds must come from your overseas funds. You can transfer the funds from your overseas bank account to directly open this account. This can be done through a wire transfer or a cheque transaction. You can also transfer funds from an existing NRE account or by using foreign currency notes. You can even use travellers cheques when you visit India.
What are the different terms that are available with this account?
You can open an FCNR account for a minimum term of 1 year and maximum term of 5 years. If you want to withdraw your funds before your term completion, you will be submitted to penal interest of 1%. Additionally, you will not get any interest if the deposit account is closed within a year.
Author Bio :- Neha Sharma is a finance student who loves to write in her free time. She has spent considerable time researching about the FCNR account. Through her work, she has provided the different benefits, thus proving why this fixed deposit is the best option for foreign currency investments.