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Saturday, 12 May 2012

Benefits of Bank FCNR a/c

 Bank FCNR a/c etc

RBI raises Interest rates on FCNRB a/c eff. 4/5/12

FCNR =Foreign Currency Non-Residents

For one year GBP (Pounds) term deposits, most banks offered upto 2.65%
The same is now raised to 3.86%

For 2 years, 3 years and 5years its 3.38, 4.47 & 4.70% respectively

Checked today, online with SBI, Axis, HDFC

Pl. Note: premature withdrawal within the first one year gets you no interest at all.

e.g. if you had say GBP10,000 in FCNR a/c for one year as on say 
July 2011 and decides to withdraw it now
in May month (may be by taking the advantage of current higher GBP currency exchange
rate say up to Rs.86/GBP ) all you will get back is your principal amount 

i.e. 10,000x86. Interest earned for 10 months say GBP241 (Rs.18,500) is lost.

However, you may still be better off with the present rising GBP exchange rates (now diminishing?) 

e.g. if you now break the deposit and convert into Rupees @86 you will get 8,60,000.

But if you had waited till end of expiry of your term say
June 2012 and the rate of exchange then say comes down to Rs.80 (it was steady around 79 upto March 2012)
You will now get back your principal amount+ Interest earned (259)
+the prevailing currency rate say @80 in this case.
10,000 + 259 (x80) = Rs.8,20,720 i.e. 40,000 less than above.

But if rates remain steady say around Rs.85 then you may get more say Rs.8,72, 015

GBP rates as of now is 86.26, (12.5.12) upto 17April it was around 81, before March it was around 79

- FCNR a/c is fully repatriable i.e. both principal and interest can be moved back where you stay or where it came from Or it can be converted into any foreign currency
- Interest rates offered on above deposits are usually more than the country in which the NRI is residing.
- Interest earned is TAX FREE
- When the Exchange rate reaches it peak or when rate is higher,
one can immediately exchange the whole into Indian Rupees.
You can then
earn upto 10% on your NRE deposit which is again Tax free
(most banks offer 9.50% same as Domestic rates) 
or just let it sit in saving bank a/c which fetches you 4% intresest, Tax free (Yes Bank pays 7%). NRE a/c funds also repatriable.
- Can be opened by NRI only (or jointly with with a Resident, not being NRI)
- Can be opened with USD, GBP, EURO, YEN & Can/Aus Dollar only

Note: The above is for general information only, you may check or confim with your bank or financial advisors.

any queries or updates including corrections in above (if any) are most welcome.

thank you.

On the 17th May 2012, Converted GBP @ Rs.85.17
Again, on 24th May 2012, Exchnaged GBP @ Rs.87.70
on 25th May, the rate was 85.80