How To Choose Among NRO, NRE And FCNR Deposits

How does an Non Resident Indian (NRI) choose among NRO, NRE and FCNR deposits? Here's a primer. Subscribe: https://www.youtube.com/channel/UCQTqvgT_qzPZn1D1bHsxtKw?sub_confirmation=1 Visit YouTube channel: https://www.youtube.com/c/FundooMoneyWorld Share Video: https://youtu.be/bRM0G6HfYnc Hello and welcome to FundooMoney, your 24X7 buddy for all your money matters. Most non-resident Indian (NRIs) would have come across terms like Non Resident External (NRE) deposits, Non Resident Ordinary (NRO) deposits and Foreign Currency Non Resident (FCNR) deposits. But how can they figure out which of three fixed deposits (FDs) they should opt for? For answers, stay tuned. Here are some things that you should keep in mind while choosing among NRE, NRO and FCNR deposits. Define the end use When choosing among NRE, NRO and FCNR deposits ask yourself what would the money be used for, or the end use. You need to make a distinction between whether the money would be used in India, in your country of residence or partially in India and abroad. When to opt for NRO deposits The interest rate offered on NRO deposits is higher and comparable to domestic deposits. However, there is restriction on repatriation in an NRO account. If you would like to use your money in India for yourself such as giving money to your family or making an investment like a property investment, opt for a NRO deposit. This will help you lock on to a higher interest bearing deposit in India. Remember, that the interest earned on NRO deposits would be subjected to income tax in India. When to go for NRE deposits When you are not sure about the end use of the money in your FD and anticipate that the money will be used both in India and abroad, opt for an NRE deposit. It will offer similar and higher interest rate as NRO account but the money will be fully repatriable. However, you may have to bear the risk of exchange rate fluctuations. You will also have to incur the additional cost of first converting your foreign exchange money into Rupees while depositing and then again reconverting it to foreign exchange if the money is required abroad. When to go for FCNR deposits In many cases, you are sure that you need the entire money abroad. In such cases, go for the FCNR deposits. You will not incur any cost of conversion of money to Indian Rupees and back during the time of deposit and repatriation. You can also take advantage of higher interest rate Indian banks offer on FCNR deposits compared to what foreign banks offer on certificates of deposit (CDs). We hope you found this useful. Do share with us and others on the channel your tips of making a choice among NRE, NRO and FCNR deposits. For more such actionable personal finance information and regular uploads, subscribe to our channel. Also, visit our website, download our mobile app and stay connected with us on Instagram, Pinterest and Slideshare.