FCNR(B) is a foreign-currency term deposit for eligible non-residents; NRE and NRO are rupee-denominated accounts. NRE is generally used to hold eligible funds in India with repatriability under the scheme. NRO is used for Indian income and other rupee transactions, but its balance is not freely repatriable. The right choice depends mainly on the currency you want to hold, where the money comes from, and whether you may need to send it abroad.
FCNR(B), NRE and NRO at a glance
The Reserve Bank of India (RBI) distinguishes these accounts by denomination, permitted account form, use and repatriation rules. The tax column below reflects the RBI comparison’s broad summary of Indian income tax; it is not a determination of any individual’s tax position or obligations in another country.
| 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, subject to applicable rules | Savings, current, recurring or fixed/term deposit, subject to applicable rules |
| Typical purpose | Hold eligible non-resident funds in a foreign-currency deposit | Hold eligible funds in India in rupees, with repatriability under the scheme | Manage bona fide rupee transactions, Indian income and dues |
| Repatriation | Repatriable under the RBI scheme summary | Repatriable under the RBI scheme summary | Current income may be remitted; other eligible balances are subject to 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 under the RBI comparison; at least 1 year to earn interest | Fixed deposits are usually 1 to 3 years; banks may accept longer tenors | As applicable to resident accounts |
| Main trade-off | Foreign-currency choice and deposit lock-in matter; rates and terms vary by bank | Rupee value can move against the account holder’s home currency | Not a freely repatriable substitute for NRE or FCNR(B) |
Source for the comparison: RBI account comparison. The one-year interest-eligibility rule is also stated in the RBI NRI deposit FAQ.
What is an FCNR(B) deposit?
FCNR(B) stands for Foreign Currency Non-Resident (Banks). It is a term-deposit scheme denominated in a permitted freely convertible foreign currency, rather than Indian rupees. Under the RBI comparison, its tenor must be at least one year and no more than five years. The RBI’s NRI deposit FAQ says a deposit must run for at least one year to be eligible to earn interest, and recurring deposits are not permitted in the FCNR(B) scheme.
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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 eliminate currency risk: its value in the account holder’s home currency, or the amount received after conversion at maturity, can change with exchange rates. RBI does not guarantee an exchange-rate outcome.
Rates depend on the bank and deposit
There is no single universal FCNR(B) rate to apply to every deposit. A bank’s offered rate can depend on currency, amount, tenor and the bank’s terms, and may change. RBI’s December 2024 FCNR(B) circular concerns the governing framework; it is not a live rate table. Check the specific authorised bank’s current terms before opening or renewing a deposit.
How NRE accounts differ
NRE means Non-Resident (External) rupee account. It is maintained in Indian rupees and may be opened in savings, current, recurring or fixed-deposit form, subject to the applicable rules. It suits eligible non-residents who want to hold funds in India in rupees and retain repatriability under the scheme.
Permitted credits include qualifying inward remittances, interest, transfers from another NRE or FCNR(B) account, and certain investment proceeds. Current income—such as rent, dividends, pension or interest—may also be credited if it has not lost its repatriable character. The RBI comparison says NRE balances are repatriable.
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The currency distinction matters: unlike FCNR(B), an NRE balance is in rupees. Its value in another currency can rise or fall with the exchange rate. The account’s repatriability does not remove that exchange-rate exposure.
How NRO accounts differ
NRO means Non-Resident Ordinary rupee account. It is also rupee-denominated, but its role is to handle bona fide transactions in India, including Indian income and legitimate dues. Permitted credits include inward remittances, legitimate dues in India and transfers from other NRO accounts, among other allowed sources.
Current income may be remitted. Other NRO balances are not generally freely repatriable: the RBI comparison describes a facility for eligible NRI/PIO remittances of up to USD 1 million per financial year, subject to applicable FEMA conditions. This is a regulatory ceiling, not an automatic entitlement to transfer any balance; the conditions for a particular remittance still apply.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.Which account fits your situation?
- Consider FCNR(B) if you are eligible, want a term deposit in a permitted foreign currency and can accept the chosen tenor. Compare the currency with the one in which you expect to spend the funds, and check the bank’s rate and early-closure terms.
- Consider NRE if you want an Indian-rupee account for eligible funds and repatriability under the scheme. Factor in the possibility that the rupee’s value may change against your home currency.
- Consider NRO if you need to receive or manage Indian income, dues or other bona fide Indian rupee transactions. Plan remittances around the applicable rules rather than treating the balance as freely transferable abroad.
These accounts serve different purposes; an NRO account is not simply an unrestricted alternative to NRE or FCNR(B). Confirm permitted credits, withdrawals, remittance documentation and bank-specific terms with the authorised dealer handling your account.
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What happens if you return to India?
A change in residential status can require an account’s status or treatment to change. The RBI comparison says an FCNR(B) deposit may continue to maturity at its contracted rate if the holder chooses. At maturity, the authorised dealer should convert it into a resident rupee deposit or, if the holder is eligible, an RFC account.
NRE accounts should be redesignated as resident accounts or their funds transferred to an RFC account on the relevant status change. NRO accounts may be redesignated as resident when the holder returns intending to stay for an uncertain period. Ask the bank to confirm the appropriate treatment for your circumstances and timing.
Tax and personal circumstances
The RBI comparison describes income earned in NRE and FCNR(B) accounts as exempt from Indian income tax and NRO income as taxable. Treat this as a broad Indian tax summary, not a conclusion about your own tax residence, applicable treaty, reporting duties or tax liability outside India. Those questions depend on individual circumstances and the relevant jurisdictions; seek qualified tax advice where needed.
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