- Due to INR depreciation banks are willing to buy back USD from NRIs and provide them with higher interest rates.
- Even though it is not sure that if the interest rate will increase further in future but wo’s to say.
- FCNR is a fixed deposit account where one can deposit overseas earned income in currencies like USD, Euro, GBP etc.
“A 5.2%* Guaranteed Interest Income Opportunity for NRIs,” says Sriram Balasubramanian, Investing adviser on a LinkedIn Post.
Superior returns
“Honestly, As a retail investor, I don’t care, nor should you. These are things we cannot control and are out of our hands,” said Mr. Balasubramanian, LinkedIn user, shares insights on Wealth, Investing, Sales and Leadership.
But here is how you can benefit (enjoy special interest rates*) & partake (support the Government in mitigating INR Depreciation) in the current scenario.
Who can voluntarily opt to enjoy superior returns?
- NRIs
- Indians who earn in USDs/ USD-pegged currencies
Information
Contact the bank’s relationship or branch manager where you have an NRI account. Check the FCNR account and ask for the latest interest rates for USD / SGD or other foreign currency deposit rates.
FCNR account
This is a fixed deposit account where one can deposit overseas earned income in currencies like USD, EURO, GBP, JPY, SGD, etc. You may want to check with the banks for eligible currencies.
Let’s assume you want to invest $10,000 (USD) in FCNR.
The benefits
- The invested sum will be in USD
- The interest earned will be in USD
- Repatriation will be in USD
- Interest earned is not taxable in India – please verify, as taxation rules are subject to change at any time.
- Funds held in these accounts are fully & freely repatriable
- The banks usually come out with a simple agreement for the FCNR deposits
- FCNR deposits can be opened for tenures of 1 year up to 5 years, and the investments are locked in for the term with guaranteed interest rates.
- You may want to check about the taxes in the country of your residence when you repatriate after the investment tenure.
Due to rapid INR depreciation, the banks are offering to buy back USD from NRIs and provide a superior interest income of 5.2%* for a limited time.
Interest income increase
“Maybe – I don’t know. However, I know I have been holding an FCNR deposit with an interest income of 1.26%, which jumped to 5.2% recently,” says Mr. Balasubramanian.
He also added, “I have never witnessed an interest rate of 5.2% for an FCNR deposit (in the last five years), and I believe this shall be a good opportunity for a Tax-free, Guaranteed, Fully repatriable interest income.”
Disclaimer
- Not a recommendation/investment advice or promoting a particular bank, shared for information only.
- Do not park emergency funds as an FCNR deposit is partly illiquid (you will lose the interest earned + penalty if you withdraw prematurely).
- Disclosure: Vested/part of my debt portfolio.
- Consult a financial planner for your investing needs.
*The interest rates mentioned in this blog (5.2% on USD deposits) are based on the information from Axis Bank. The interest rates may vary; check with the bank managers.
Did you subscribe to our Newsletter?
It’s Free! Click here to Subscribe.
Source: LinkedIn
