Difference Between NRE and FCNR Account | NRE vs FCNR Account
Non Resident External (NRE) Savings Account is an account which is maintained in Indian rupee by an NRI 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 NRE account and FCNR account as listed in the following table which would help you choosing between the two:
Difference between NRE and FCNR Account
Basis of Difference | Non-resident Rupee Accounts(NRE) | 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 abroad and would like to remit it back to India. | Vs | Opened by NRIs to park their overseas income in foreign currency in India without converting them into rupees. |
Source of Fund | Foreign funds or repatriable rupee funds | 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 Year to 5 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 holders can be NRIs residing in the same or different countries | Vs | Allowed. Joint holders can be NRIs. |
Nomination | Allowed. Nominees can be Indian Residents/NRIs | Vs | Allowed. Nominees can be Indian Residents/NRIs. |
Repatriability | Principal as well as interest can be entirely repatriable | Vs | Principal as well as interest can be entirely repatriable |
Tax Exemptions | Interest is tax-free in India. However, it would attract tax in the country of residence of the account holder. | 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 |