FCNR account stands for Foreign Currency Non-Resident Account.
FCNR accounts are term deposit accounts which are maintained by NRIs and PIOs in the form of foreign currencies. This is a type of fixed deposit for foreign currencies and not a savings account.
This topic is relevant for all IAS exam aspirants.
What is the difference between FCNR and FCNR B?
The major difference between FCNR and FCNR B is that FCNR B was introduced with an aim to replace the already prevailing FCNR scheme known as FCNR A where the foreign exchange risk was borne by RBI and subsequently by the Govt. of India.
The FCNR A scheme was withdrawn due to its quasi-fiscal costs to the government.
Is FCNR Repatriable?
In FCNR accounts, both principal and interest are freely repatriable.
Who can open an FCNR account?
FCNR (B) deposit account has provision for nomination facility like the usual FD account.
The nominee for the account can be a resident Indian. This FCNR (B) account can be closed prematurely. In case the account holder wants to earn interest on the same, the account should be functional for a minimum of 1 year.