InvestmentFinancial Glossary
FCNR Deposit
Definition
Foreign Currency Non-Resident deposit — a fixed-term deposit maintained in foreign currency (USD, GBP, EUR, JPY, CAD, AUD) in an Indian bank. The deposit and interest are fully repatriable. Interest is tax-free in India. The tenor ranges from 1 to 5 years, and returns are denominated in the foreign currency, eliminating exchange rate risk.
Why It Matters
FCNR deposits are the only Indian bank instrument that eliminates currency risk for NRIs. While interest rates are lower than NRE FDs (since they are benchmarked to LIBOR/SOFR), the guarantee of returns in your home currency makes them attractive during periods of rupee depreciation. They are ideal for parking funds you plan to repatriate within 1-5 years.