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FCNR accounts have to be opened and maintained in the foreign currency itself.

The source of funds deposited into FCNR accounts have to be from sources

abroad. They can also be from your other NRE or FCNR accounts.

The principal amount and the interest are fully repatriable

Interest income earned on the money in a FCNR account is non-taxable in India.

However, it may be taxable in your country of residence as per that country's

tax rules.

You can only have other NRIs as joint account holders on FCNR accounts.

Resident Indians cannot be joint account holders in FCNR accounts with NRIs.

NRE and FCNR accounts have the advantages of not having to pay taxes in India

which could be a hassle for NRIs trying to figure out the tax rules in India as well

as their country of residence.

People opening NRE accounts and would like to repatriate their funds at some

point must consider the foreign currency conversion rates at the time the funds

are being deposited versus the time when the funds have to be repatriated. This

can carry risks as well as rewards depending on the forex rates trend. For

example, if $1000 is converted to Indian rupees at Rs. 50 per dollar and then

converted back to dollars at a conversion rate of Rs. 40 per dollar, then you

would get back $1250 for a good gain. On the other hand, if the dollar is at Rs.

55 per dollar, you would lose some of your principal when you do the

repatriation.

FCNR accounts do not carry any forex rate risk as the accounts are always

maintained in the foreign currency.

NRO accounts have the advantage of being able to deposit funds from both

sources in India and abroad and having joint account holders in India.

Repatriability of funds is a disadvatage for NRO accounts. The key advantage of

NRO fixed deposit accounts is the substantially higher interest rates as compared

to FCNR and NRE accounts. The rate of interest offered is different in different

banks and also depends on the fixed deposit tenure. So your choice of whichbank to open a account in can depend on the interest rates.

FCNR and NRE fixed deposit accounts typically yield much lower than NRO fixed

deposit accounts. Most banks in India offer the same interest rate for FCNR and

NRE fixed deposit accounts. So if you are planning to choose a bank for your

NRE or FCNR fixed deposits, interest rates offered is not a consideration.

Both NRE and NRO savings accounts yield 3.5% currently. There is no savings

account option for FCNR accounts.

NRE Savings and NRO Savings accounts allow you to have family members inIndia as mandate holders whereas you cannot have mandates for the fixed

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deposit options available in NRE, NRO and FCNR accounts. Mandate holders can

withdraw funds from your accounts in India with some type of a card such as a

debit card of a ATM card. They can also withdraw funds at the bank locations.

Most banks also provide for taking loans for a certain percentage of your existing

balance on your NRE, NRO and FCNR fixed deposit accounts.

Note : Meetings by Appt. Only

Regards

Kirang Gandhi

www.fpindia.in

Independent Financial Planner

M-9028142155