3 weeks ago
Should NRIs split savings between FCNR(B) and NRE deposits?
Some people from India live and work in other countries, and they are called NRIs.
They can save money back home in special bank accounts.
One type of account, called NRE, keeps the money in Indian rupees, and the interest is tax-free in India.
But NRE accounts have a risk: if the Indian rupee loses value, the money is worth less in the saver's own country.
Another type, called FCNR(B), keeps the money in foreign money like dollars or euros.
This protects the saver from changes in the value of the rupee.
Smart helpers say you should not choose just by looking at interest rates.
The big question is who carries the currency risk.
Some experts say you can put some money in each type of account.
That way, you can earn higher Indian interest on part of your money and stay safe from currency changes on the rest.
The special bank benefits from India's central bank last until September 30, 2026.
NRE deposits are rupee-denominated with fully repatriable, tax-free-in-India principal and interest, but the depositor bears currency risk.
FCNR(B) deposits are held in foreign currencies such as USD, GBP, EUR, JPY, AUD, CAD or SGD, shielding depositors from exchange-rate fluctuations.
Experts say comparing the two products solely on interest rates is misleading because the key difference is who bears the currency risk.
Eligible NRE deposits (3 years and above) and FCNR(B) deposits (3-5 years) qualify for the RBI's temporary relaxation until September 30, 2026.
A combination of both deposits can help NRIs optimise returns while managing currency risk, depending on financial goals, currency outlook and investment horizon.
- Who
- NRIs, OCIs and PIOs considering deposits in India; experts Arushi Bhagotra, Siddharth Maurya and Paritosh Desai offered views.
- What
- A comparison of NRE and FCNR(B) deposits and how splitting savings between them can balance returns and currency risk.
- Where
- India, where NRIs can open these deposits; FCNR(B) deposits can be held in permitted foreign currencies.
- When
- The RBI's temporary relaxation for eligible deposits runs until September 30, 2026.
- Why
- Because rupee depreciation can reduce NRE returns in an NRI's home currency, while FCNR(B) deposits protect against exchange-rate volatility.
NRE deposits: higher rupee interest
FCNR(B) deposits: currency-risk shield
Currency risk
NRE deposits: higher rupee interest
The depositor bears currency risk; rupee depreciation can reduce the effective return in the depositor's home currency.
FCNR(B) deposits: currency-risk shield
Principal and interest are maintained in the same foreign currency, so there is no currency risk for the depositor if held to maturity.
Best use case
NRE deposits: higher rupee interest
More rewarding for NRIs who believe the rupee will remain stable or appreciate and plan to invest or spend in India.
FCNR(B) deposits: currency-risk shield
Suitable for NRIs planning overseas expenses, expecting the rupee to weaken, or seeking protection from exchange-rate volatility.
Returns
NRE deposits: higher rupee interest
Offers attractive rupee interest rates of 7-8%, tax-free in India for eligible NRIs, but returns depend on INR movement.
FCNR(B) deposits: currency-risk shield
Offers a fixed return in the chosen foreign currency, though interest rates may differ by currency.
Key facts
- NRE denomination
- Indian Rupees (INR)
- FCNR(B) denomination
- Foreign currency (USD, GBP, EUR, JPY, AUD, CAD, SGD)
- Eligible depositors
- NRIs, OCIs, PIOs
- Repatriability
- Principal and interest fully repatriable for both products
- Tax treatment in India
- Interest tax-free for eligible NRIs
- NRE interest rate
- 7-8%, but returns depend on rupee movement
- RBI relaxation deadline
- September 30, 2026
- FCNR(B) RBI benefit
- Special swap facility and interest-rate relaxation for 3-5 year deposits
Quotes
Siddharth Maurya
Managing Director, Vibhavangal Anukulkara Pvt Ltd
“"The decision should depend on an NRI's financial objectives, currency outlook and risk tolerance. FCNR(B) deposits provide protection against exchange‑rate volatility, while NRE deposits offer greater flexibility for those planning to use their money in India."”
businesstoday.in
“"While the enhanced returns on offer have renewed interest in FCNR(B) and NRE deposits, it would be inaccurate to frame the choice between them as a comparison of headline rates. The more consequential distinction is who bears the currency risk."”
businesstoday.in
Sources
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