Foreign currency non-resident account (banks) or FCNR(B) deposits
Choice of currency: The term deposit can be made in six foreign currencies—pound sterling, US dollar, euro, yen, Canadian dollar and Australian dollar. Most banks will let you remit in any convertible currency, but the amount will be converted to one of the above six currencies as per your choice.
Type of account: Term deposit.
Rate of interest: Leading banks like SBI, Bank of Baroda and ICICI Bank have recently hiked deposit rates. It now varies from 0.77% to 7.22% depending on the currency you choose, the term of deposit and the bank.
Tenure of deposit: 1-5 years.
Minimum deposit: Between 1,000 and 2,000 units, depending on the currency, but is higher for the yen.
Repatriability: The principal and the interest are fully repatriable; the entire deposit is exempt from tax.
Loan against deposit: Account holders can take loans of up to Rs 20 lakh, but foreign currency loans are not for third parties.
Some banks have introduced a variation called the foreign currency-linked rupee deposits or the FCLR scheme. Here, the risk of losing money due to a drop in the foreign exchange rate is eliminated since the maturity value is determined in foreign currency at the time of application.
Choice of currency: You can open your account in any currency but the bank will maintain the account in Indian rupees.
Type of account: Both savings and current accounts, as well as recurring and fixed deposits.
Rate of interest: While the savings accounts will earn a 3.5% interest, the NRE deposits will earn from 3.5% to 4.17%.
Tenure of deposit: 1-10 years.
Minimum deposit: Most banks demand Rs 25,000.
Minimum amount to open an account: Typically varies from Rs 10,000 to Rs 15,500.
Repatriability: Funds held in the account are fully repatriable. NRE accounts are not taxable in India.
Loan facility: Account holders can take loans of up to Rs 20 lakh, for themselves or for third parties.
Choice of currency: The rupee. When an Indian citizen acquires the NRI status—not applicable in Nepal and Bhutan—his resident account is designated as an NRO account. If he earns income in India through rent, pension, dividend, etc, this could be a good option.
Type of account: Bank accounts and all term deposits.
Rate of interest: As applicable on resident accounts and deposits, ranging from 3.5% to 11.5%.
Deposit term: 7 days to 10 years
Repatriability: The principal funds are entirely non-repatriable but the interest is repatriable after tax. Balances of up to a maximum of $1 million can be repatriated in a year.
Income tax: The interest earned will be taxed at 30% and will be deducted at source. If the total interest is over Rs 8.5 lakh, it will also incur a 10% surcharge.
Loan facility: You can avail of loans of up to 90% of your deposit.
