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 DifferenceNon-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
PurposeOpened 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 FundLocal 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 inIndian Rupee
Vs
Foreign Currency e.g. USD, GBP, EURO,
AUD, YEN, etc.
Minimum BalanceUsually, 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.
RepatriabilityPrinciple 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 RiskCurrency 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 accountPermitted
Vs
Permitted