Difference Between NRO and FCNR Account | NRO vs FCNR Account
An NRO (Non-Resident Ordinary) account is maintained and managed by resident Indian who becomes non resident indian whereas Foreign Currency Non Resident (FCNR) account is a term deposit account that can be maintained by NRIs and PIOs in foreign currency.
There are many differences between NRO account and RFC account as listed in the following table which would help you choosing between the two:
Difference between NRO and FCNR Account
Basis of Difference | Non-Resident Ordinary(NRO) | Foreign Currency Non Resident (FCNR) | |
---|---|---|---|
Type of Accounts | Can be opened as Savings Bank Deposit, Current Account, Term Deposit | Vs | Can be opened as Term Deposit |
Purpose | Opened by NRIs who earn income in India like income from rent from real estate properties in their names or pension etc. | Vs | Opened by NRIs to park their overseas income in foreign currency in India without converting them into rupees. |
Source of Fund | Local rupee earnings. Existing domestic account of the residents can be converted to NRO account on their taking up employment/ business/immigration abroad. | Vs | Foreign currency notes, Travellers cheque, Currency Cheque, Wire Transfer from overseas banks or Transfer funds from an existing NRE account |
Maintained in | Indian Rupee | Vs | Foreign Currency e.g. USD, GBP, EURO, AUD, YEN, etc. |
Minimum Balance | Usually, Savings : Rs. 10,000, Term / Fixed Deposit: Rs. 50,000 | Vs | Usually, USD 1000, GBP 500, EUR 1000, JPY 110000, AUD 1000, CAD 1000 - also varies from bannk to bank |
Period | 1 Month to 10 Years | Vs | 1 Year to 5 Years |
Rate of Interest | 7% to 9% depending on amount, period and bank | Vs | For USD - 1.5% to 2.75%, GBP- 0.5% to 1.5%, etc. depending on currency, period and bank |
Joint Holding | Allowed. Joint holder can be resident Indians | Vs | Allowed. Joint holders can be NRIs. |
Nomination | Allowed. Nominees can be Indian Residents/NRIs | Vs | Allowed. Nominees can be Indian Residents/NRIs. |
Repatriability | Principle is not repatriable but current income and interest earning net of taxes is repatriable. | Vs | Principal as well as interest can be entirely repatriable |
Tax Exemptions | Interest is taxable. Tax is deducted at source(TDS) at 30% plus surcharge and cess | Vs | Interest is tax-free in India. However, it would attract tax in the country of residence of the account holder. |
Currency Risk | Currency risk is there, there will be a loss in case rupee depreciates further at time of maturity and repatriation. | Vs | No currency risk as the investment is made in foreign currency and is withdrawn in the same currency. |
Loan against this account | Permitted | Vs | Permitted |