An FCNR (Foreign Currency Non Resident) deposit is maintained as fixed deposits in US Dollars, Pound Sterling, Euro or Japanese Yen. An FCNR deposit is a compound interest earning deposit. This deposit can be held jointly with another non- resident Indian. The principal and interest can be repatriated and currently you do not have to pay Indian income tax on the interest earned. FCNR deposit can be held as fixed deposit for one of these three maturities: (a) one year and above but less than 2 years, (b) two years and above but less than 3 years and (c) three years.

The advantage of holding your deposit in an FCNR account is, you need not worry that the Rupee will depreciate while your deposit is with the bank, since your deposit is maintained in the foreign currency of your choice.

Once you come back to India for good, the FCNR deposit can continue till maturity at the contracted rate of interest.

If you are looking for a deposit to make your money work extra hard for you, look no further. FCNR US Dollar deposits now come at an attractive APY of up to 3.93%*. Attractive options are also available in Euros and British Pounds. For more information, click here.

*Conditions Apply   Disclaimer

In the third week of February, following a news report that two public-sector companies - Instrumentation Ltd. and HMT Ltd, both under the Ministry of Heavy Industries - had missed meeting interest obligations on a bond issue, Standard & Poor's issued a statement that as the bond issue was guaranteed by the Indian government it would become the direct obligation of the government, and hence progress in fulfilling these obligations has potential implications for the sovereign's credit rating.




While this is not a positive sign, we are not unduly concerned, as officials have explained that this development took place around the end of December, when the entire government machinery was busy dealing with the tsunami disaster. In addition, we believe this highlights the absence of a centralized process for tracking and honoring such obligations where the government has stood as a guarantor. (Guarantees currently constitute 12% of GDP). We believe this should be taken not as a reflection of the government's credit standing but more of the need to tighten the payment process.




The rupee closed almost unchanged at 43.84 against the dollar in a range-bound week. Despite buoyant FII flows, dollar buying by state-run banks coupled with demand from oil companies induced traders to cover short dollar positions and held down the rupee. We expect trends to remain unchanged in the run-up to the budget. We maintain our 12-month estimate of Rs 42.5/US$.




The benchmark 10-year yield rose to 6.5% from 6.45% due to high crude oil prices coupled with the announcement of a state-loan sale for Rs 63bn. The rise in yields was limited due to the drop in inflation to 5.01% and improvement in liquidity. The reverse repo daily average bids at the LAF window increased to Rs 184bn from Rs 132bn. In the run up to the budget week, trading is likely to be range-bound just like the rupee.