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FCNR(B) is a foreign-currency term deposit; NRE and NRO are rupee accounts. NRE is generally used for eligible funds that need repatriability, while NRO is designed for Indian income and rupee transactions, with limits on remitting balances abroad. The right choice depends on the currency you want to hold, where the money comes from, and whether you may need to send it outside India.
How FCNR(B), NRE and NRO accounts differ
The Reserve Bank of India (RBI) distinguishes these accounts by denomination, account form and permitted use. Its account comparison summarizes the main differences:
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| Feature | FCNR(B) | NRE | NRO |
|---|---|---|---|
| Currency | Permitted freely convertible foreign currency | Indian rupees | Indian rupees |
| Account form | Term deposit only | Savings, current, recurring or fixed/term deposit | Savings, current, recurring or fixed/term deposit |
| Typical purpose | Hold eligible non-resident funds in a foreign-currency deposit | Hold eligible funds in India in rupees, with repatriability under the scheme | Receive Indian income and handle bona fide rupee transactions |
| Repatriation | Repatriable under the RBI scheme summary | Repatriable under the RBI scheme summary | Current income may be remitted; other eligible balances have conditions and a USD 1 million per financial year limit for NRI/PIO remittances |
| Indian tax summary in RBI comparison | Income exempt | Income exempt | Income taxable |
| Deposit tenor | 1 to 5 years | Usually 1 to 3 years for fixed deposits; banks may accept longer | As applicable to resident accounts |
The tax row reflects the RBI comparison’s broad Indian tax summary, not an assessment of an individual’s full tax residence, treaty position or obligations in another country. Confirm how the rules apply to your circumstances.
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FCNR(B) stands for Foreign Currency Non-Resident (Banks). It is a term-deposit scheme for eligible non-residents, held in a permitted freely convertible foreign currency rather than rupees. The RBI comparison gives a tenor range of 1 to 5 years. The RBI’s NRI deposit FAQ says recurring deposits are not permitted under the scheme and a deposit must run for at least one year to earn interest.
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Because the deposit remains in its selected foreign currency, the principal is not converted into rupees while it is held. That does not remove every currency risk: its value in your home currency, and the value after any conversion at maturity, can change with exchange rates. RBI does not guarantee an exchange-rate outcome.
When an NRE account may fit
An NRE (Non-Resident External) account is a rupee account for eligible non-residents. It can receive qualifying inward remittances, interest, transfers from another NRE or FCNR(B) account, and certain investment proceeds. RBI also allows certain current income—such as rent, dividends, pension and interest—to be credited if it has not lost its repatriable character.
NRE balances are repatriable under the RBI scheme summary. Since the account is denominated in rupees, the amount you ultimately receive in another currency can still be affected by exchange rates when you convert or remit it.
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An NRO (Non-Resident Ordinary) account is a rupee account for bona fide Indian transactions, including Indian income and dues. Permitted credits include inward remittances, legitimate dues in India and transfers from other NRO accounts, among others.
Current income may be remitted. Other balances are not generally freely repatriable: the RBI comparison says eligible NRI/PIO remittances may be made up to USD 1 million per financial year, subject to applicable conditions under FEMA. This is a regulatory limit, not an allowance that removes the need to meet those conditions. An NRO account is therefore not a freely repatriable substitute for NRE or FCNR(B).
How to choose between them
- Choose FCNR(B) when: you want an eligible term deposit held in a permitted foreign currency and can accept the deposit tenor and access terms offered by the bank.
- Consider NRE when: you need a rupee account for eligible funds that remain repatriable under the scheme.
- Consider NRO when: you need to receive Indian income or manage other legitimate rupee transactions, and understand the conditions on remitting balances.
For FCNR(B), compare the currency, tenor, early-withdrawal terms and rate offered by the bank. RBI sets the regulatory framework, but the rate is not universal: it depends on the bank and deposit details and can change. The RBI’s December 2024 circular refers to the governing directions; it is not a live rate table. Check the chosen bank’s current terms before opening a deposit.
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A change in residential status can require an account to be redesignated or converted. RBI’s account comparison says an FCNR(B) deposit may continue until maturity at its contracted rate if the holder chooses. At maturity, the authorised dealer should convert it to a resident rupee deposit or, if the holder is eligible, an RFC account.
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