Yes, you can close your FCNR (B) fixed deposit account before maturity. If you close it before completion of 1 year, no interest will be paid to you. If you close it after 1 year, interest rate as on the date of deposit or on the date of closure, for the Period run, whichever is less, minus penalty will be paid to you. The penalty is usually 1%.
On your return to India, your FCNR deposit may be allowed to continue till maturity at the contracted rate of interest, if you wish so. Alternatively, your FCNR deposit account can be converted into resident rupee deposit account or RFC account (if you are eligible for the same) at your option.
If your account is opened under auto renewal mode (default mode in most of the banks) then bank will automatically renew the fixed deposit account at prevailing rates and it will keep earning interest rate on deposit. In case, you want to open the account under non-auto renewal mode, you need to give written instruction to the bank for the same.
Yes, loan facility available against your FCNR Deposit Account for permitted purposes, as per RBI guidelines and the amount of loan would depend upon the currency of the FCNR.
Yes. Banks presently have a restriction on granting fresh loans or renewing existing loans to individuals in India in excess of Rupees 1 crore against FCNR (B) deposit account.
The funds in an FCNR account should necessarily come from your overseas funds. Some of the credits to your FCNR account are:
Only Fixed / Term Deposit Account can be opened under FCNR(B) with maturity of minimum 1 year & maximum 5 years.
FCNR (B) accounts are specially designed for NRIs and PIOs to provide them secure and flexible way to manage their foreign earnings.
Interest rate offered on FCNR (B) accounts are significantly influenced by global market currency conditions and is most of the times higher than interest rate offered on domestic deposits.
FCNR (B) account holders can freely repatriate both the principal amount and the interest earned to their home country without any restrictions.
FCNR (B) accounts are denominated in various currencies viz. USD, EUR, GBP, AUD and CAD so you get flexibility. Secondly, the interest earned on FCNR (B) account deposits is exempted from taxes in India. account holders will get better returns on their FCNR (B) account investments. Investment in FCNR (B) account minimizes the risk of losing value due to currency fluctuations. Facility of repatriation is there without any restrictions.