An FCNR(B) account is a term deposit that an NRI holds with an Indian bank in a foreign currency. It is made, kept and repaid in that currency, so the rupee does not enter it.
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FCNR Account for NRIs: How the Deposit Works
An FCNR account is a term deposit that an NRI holds in India in a foreign currency, so the money stays in the currency in which it arrived. Its full name is the Foreign Currency Non-Resident (Bank) deposit, or FCNR(B). This guide sets out how it works, how its interest is taxed in India, and how it differs from NRE and NRO accounts.
By Statepolitan | | 6 minute read
What an FCNR(B) deposit is.
FCNR(B) stands for Foreign Currency Non-Resident (Bank). It is a fixed deposit that a non-resident opens with an Indian bank in a freely convertible foreign currency. The deposit is made, kept and repaid in that currency, which is the point of it: the rupee does not enter the account.
Only term deposits are allowed. There is no savings or recurring version. The Reserve Bank of India sets the framework, and each bank sets its own rates within it.
Features at a glance.
| Feature | Detail |
|---|---|
| Currency | A freely convertible foreign currency; the deposit is repaid in the currency in which it was made |
| Who can open | NRIs, OCIs and PIOs |
| Term | One year to five years; the range can differ by bank and currency |
| Interest | Set by each bank within the Reserve Bank of India’s framework; current rates and any limits come from the bank |
| Sending money abroad | Principal and interest can be sent abroad |
| Tax in India | Interest is not taxed in India while the holder is non-resident |
| Early withdrawal | No interest before one year; after that, the terms depend on the bank |
| Joint holding | With other NRIs, or with a resident relative on a former or survivor basis |
Currencies and exchange risk.
Banks commonly offer the US dollar, pound sterling, euro, Canadian dollar, Australian dollar and Singapore dollar, and some offer the Japanese yen. Each bank publishes its own list, and its own terms for each currency.
The deposit protects the holder from movements of the rupee. What returns at maturity is the sum deposited, in the same currency, plus interest. The risk that remains is the holder’s own: the foreign currency can still rise or fall against the currency in which the family spends.
For this reason the deposit suits capital that will be needed in a foreign currency, or that is waiting for a decision in India.
FCNR, NRE and NRO accounts compared.
| Account | Held in | Sending money abroad | Interest tax in India |
|---|---|---|---|
| FCNR(B) deposit | Foreign currency | Principal and interest can be sent abroad | Not taxed while the holder is non-resident |
| NRE account or deposit | Indian rupees | Principal and interest can be sent abroad | Not taxed while the holder is non-resident |
| NRO account or deposit | Indian rupees | Limited and subject to conditions | Taxed in India |
An NRI may hold all three at once. An NRE deposit is kept in rupees, so the holder carries the rupee when the money is converted back; an FCNR deposit does not. An NRO account is for income earned in India.
Tax on FCNR interest.
Interest on an FCNR(B) deposit is not taxed in India while the holder is a non-resident, and it is reported as exempt income. It may be taxed in the country where the holder lives, which is a matter for the holder’s adviser there.
The exemption depends on the holder’s residential status. When that status changes, the tax treatment changes from that date, and the holder confirms it with a tax adviser.
Early withdrawal and return to India.
A deposit broken before one year earns no interest. After one year, interest is paid at the rate for the period the deposit was held, and the bank may charge a penalty. The terms are set when the deposit is booked.
An NRI who returns to India for good may keep the deposit until maturity at the contracted rate. It can also be moved to a resident account, subject to RBI rules. Tax treatment changes from the date the status changes.
Where an FCNR deposit fits.
An FCNR deposit is a holding for patience. It suits a reserve kept in a foreign currency, money awaiting a decision, or capital that must come back in the currency in which it left. It is not built for growth.
For growth, income or a home, other options apply. The guide to NRI investment in India sets them side by side. Most NRIs hold several.
Sources.
Reserve Bank of India, master circular on interest rates on deposits (FCNR(B) term and ceilings).
ICICI Bank, “What is an FCNR (B) fixed deposit account?” and FCNR(B) deposit FAQs.
HDFC Bank, “What is FCNR account”.
Outlook Money, “FCNR(B) deposits: eligibility, interest, tax rules and premature withdrawal explained”.
Checked on 8 November 2026. Rates and conditions change, so each point should be confirmed with the bank.
Questions on FCNR accounts.
NRIs, OCIs and PIOs, with a bank that offers it. It can be held jointly with other NRIs, or with a resident relative on a former or survivor basis.
Not while the holder is a non-resident. It is reported as exempt income. When the holder’s residential status changes, the tax treatment changes from that date. Tax in the country of residence is separate.
An FCNR deposit is held in a foreign currency, so the holder carries no rupee risk. An NRE deposit is held in rupees. In both, principal and interest can be sent abroad and interest is not taxed in India while the holder is non-resident.
Yes. Each serves a different purpose, and many NRIs hold all three.
Up to five years under the RBI framework, with a minimum of one year. Some banks offer a shorter range for some currencies.
Yes. Before one year, no interest is paid. After one year, interest is paid at the rate for the period held, and the bank may charge a penalty. The terms are set at booking.
The deposit may be kept until maturity at the contracted rate, or moved to a resident account, subject to RBI rules. Its tax treatment changes from the date the holder becomes a resident.
General information for orientation. It is not tax or legal advice; legal opinions and tax positions rest with the reader’s own advisers.
Capital held in India, discussed in private.
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