NRIs: FCNR deposits are back in focus.
RBI has introduced measures to support fresh FCNR(B) deposits and attract dollar inflows into India.
a) What is FCNR?
FCNR deposits allow NRIs to park money in foreign currency, such as USD, with Indian banks.
Why it matters:
1. Helps reduce rupee depreciation risk
2. Provides foreign currency exposure
3. Interest is generally tax-free in India for eligible NRIs 4. May offer improved dollar deposit rates during the policy window.
What NRIs should compare:
1. FCNR deposit rates
2. NRE FD rates
3. Currency movement
4. Tenure and liquidity needs
5. Taxability in country of residence
FCNR can be useful for NRIs who want dollar-based exposure, but it should be reviewed as part of the overall investment plan.