Latest news with #ForeignCurrencyNon-Resident
Time of India
2 days ago
- Business
- Time of India
Rupee fall makes diaspora's foreign currency deposits attractive
Chennai: The weakening rupee was among the reasons that made foreign currency deposits attractive for NRIs. The net inflow under Foreign Currency Non-Resident (B) Account (FCNR(B)) increased by 11% YoY from $6.4 billion in FY24 to $7.1 billion in FY25. It comes after NRIs pulled out their deposits earlier, turning the category (FCNR(B)) negative during 2020–21 and 2021–22. Data available in RBI's annual reports shows that FCNR (B) recorded a net outflow of -$3.8 billion and -$3.6 billion during two Covid years of 2020–21 and 2021–22, respectively. However, its net inflow revived during 2022-23 and stood at $2.4 billion. In FY25, the net inflow under non-resident deposits basket comprising Non-Resident External (Rupee) Account (NRE), Non-Resident Ordinary (NRO) Account and FCNR (B) was at $16.2 billion, the highest in the past 11 years. Of this, FCNR (B) share was 44%. RBI raising the interest rate caps on FCNR (B), allowing banks more freedom to offer better returns also fuelled its growth. You Can Also Check: Chennai AQI | Weather in Chennai | Bank Holidays in Chennai | Public Holidays in Chennai FCNR(B) account is a type of fixed deposit account designed specifically for NRIs and Persons of Indian Origin (PIOs). Its unique feature is that money is held in international currencies such as US Dollar (USD), British Pound (GBP), Euro (EUR), Australian Dollar (AUD), Canadian Dollar (CAD), Swiss Franc (CHF), and Japanese Yen (JPY), which protects depositors from exchange rate fluctuations. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Upexi's $100M Solana Investment: What It Means for Shareholders bullseyealerts Read More Undo While the duration of term deposits ranges from 1 year to 5 years, interest earned on FCNR(B) accounts is tax-free in India. Private sector South Indian Bank, which has a sizeable NRI customers base particularly in the Gulf countries, says it has experienced a steady growth in NRE, NRO, and FCNR(B) accounts over the last three financial years at 3%, 5% and 6%, in FY23, FY24, and FY25 respectively. "The relative strength and stability of foreign currencies such as the US dollar further incentivized NRIs to invest in these accounts. Additionally, the depreciation of the Indian Rupee enhanced the appeal of foreign currency deposits as a hedge against exchange rate risk," said Biji S S, senior general manager and head of branch banking, South Indian Bank. Tanvi Kanchan, head - NRI business & strategy, Anand Rathi Shares and Stock Brokers said, "Looking ahead to FY26, inflows are expected to rise further. This is because interest rates in India are still relatively high, and if rates fall in the US or other developed markets, India will become even more attractive for NRIs seeking better returns," Kanchan added.
Mint
23-06-2025
- Business
- Mint
What happens to the tax exemption on NRE and FCNR interest when I become an RNOR?
Q. I have been an NRI for the past 24 years. I have some NRE and FCNR deposits which will mature after 1-April-2026. If I come back to India in July 2025 for good, my residential status for AY-2026-2027 will be Resident but Not Ordinary Resident (RNOR). Do I have to liquidate all my NRE and FCNR deposits or can I hold these deposits up to maturity? How will my tax liability be determined for interest on such fixed deposits? Interest on NRE (Non-Resident External) deposits as well as FCNR (Foreign Currency Non-Resident) deposits are fully exempt in the hands of a non-resident as per the provisions of the Income Tax Act, 1961. When you come back to India with an intention to stay in India for an indefinite period, you become a resident under the FEMA (Foreign Exchange Management Act) laws immediately on your arrival in India. Once you become a resident under FEMA, you are required to convert your existing NRE accounts to either a regular resident rupee account or RFC (Resident Foreign Currency Account). While the deposits can be continued with the stipulated rate of interest till maturity, the interest after the date of your arrival in India will become taxable in India. The bank will deduct tax at source on the interest credited for the period post your arrival in India. As far as deposits in FCNR deposits are concerned, you can continue to have the FCNR deposits till their maturity, and on maturity, the deposits have to be converted into resident rupee accounts or transferred to RFC accounts. Unlike interest on NRE deposits, which becomes taxable once you become a resident under FEMA, interest on an FCNR account does not become taxable in India immediately on your coming back to India and will continue to remain tax exempt as long as you remain a non-resident or a resident but not an ordinary resident under income tax laws. Read all our personal finance stories here. Balwant Jain is a tax and investment expert and can be reached at jainbalwant@ and @jainbalwant on his X handle. Disclaimer: The views and recommendations made above are those of individual analysts, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
Indian Express
22-05-2025
- Business
- Indian Express
RBI sold nearly $400 billion of foreign currency in FY25, sharply higher than previous fiscal
The Reserve Bank of India sold a record $398.71 billion of foreign currency in 2024-25 on a gross basis as the Indian central bank stepped up its defence of the rupee amid a volatile global environment. The RBI's sale of foreign currency in the spot market in the last financial year was sharply higher than the $153.03 billion it had sold in 2023-24 and the previous record of $212.57 billion in 2022-23, data released late Wednesday by the central bank showed. To be sure, the RBI also bought foreign currency heavily last year, resulting in a net sale of $34.51 billion for the 12 months ended March 2025. However, this was only the seventh time in the last three decades – data for which is available – that the central bank sold more foreign currency in a year than what it bought. Further, the $34.51 sold on a net basis in 2024-25 is second only to the $34.92 billion sold in 2008-09 during the global financial crisis. Turbulent year After a fairly stable couple of years, the rupee began weakening sharply in the second half of 2024-25 as it became increasingly likely Donald Trump would return to the White House as president of the US for a second term. The RBI's interventions in the currency market peaked in December 2024 when it sold a massive $69.05 billion – the most it has ever sold in a month. All in all, the RBI sold $291.03 billion – or 73 per cent of its full-year gross sales – in the second half of 2024-25 as the panic caused by Trump's protectionist trade policies pushed the rupee to an all-time low of 87.95 per dollar in early February 2025. Falling reserves The RBI's defence of the rupee was not without its cost, with India's foreign exchange reserves slumping by around $80 billion betweeen late September 2024 and mid-January 2025 to under $625 billion. To attract more capital inflows, the then RBI governor, Shaktikanta Das, announced in December 2024 that the ceiling on interest rates banks can offer on so-called Foreign Currency Non-Resident (Bank) – or FCNR(B) – deposits was being raised by 150 basis points until March 2025. One basis point is a hundredth of a percentage point. However, data released Wednesday by the RBI showed the relaxation seems to have made very little difference, with total inflows in the aforementioned FCNR(B) deposit scheme in 2024-25 amounting to $7.08 billion compared to $6.37 billion in 2023-24.
