FCNR vs NRE vs NRO Account: NRI Bank Accounts Explained (2026)

General information, not tax, legal or banking advice. RBI rules, bank products and rates change, so check with your bank before you act. Last reviewed October 2026.

NRE vs NRO vs FCNR: the comparison at a glance

The three accounts differ on four things: the currency your money is held in, where the money is allowed to come from, how the interest is taxed in India, and how freely you can send the money back abroad. This table sets them side by side.

Not sure which one fits your money? Our free account comparison tool asks where the funds come from and where you want them to end up, and points you to NRE, NRO or FCNR.

What is an FCNR account?

FCNR stands for Foreign Currency Non-Resident account. The full name is FCNR (B), the B standing for banks, because under this scheme the bank, not the RBI, carries the currency risk. You place a fixed deposit in a foreign currency and it stays in that currency: deposit USD 50,000 and you get dollars back on maturity, with interest paid in dollars. Nothing is converted into rupees unless you ask for it.

›FCNR account features

• Term deposits only. There is no FCNR savings or current account; you need an NRE or NRO account alongside it for day-to-day use.
• Tenure of at least 1 year and at most 5 years, as set by the RBI.
• Held in a freely convertible currency the bank offers. Most offer US dollars, pounds, euros, Canadian and Australian dollars, and some add yen, Singapore dollars or Hong Kong dollars.
• Interest is exempt from Indian income tax while you are a non-resident, so no TDS is deducted.
• Principal and interest are fully repatriable, with no annual cap.
• The RBI sets a ceiling on FCNR interest rates, linked to the benchmark rate for each currency, so FCNR rates track rates abroad rather than Indian rupee rates.
• Loans against the deposit are generally available, in rupees or foreign currency, subject to the bank's terms.

›Who an FCNR account suits

FCNR suits you if you will want the money back in the same foreign currency, for example savings you may move back to the US in a few years, or a cushion you do not want exposed to the rupee. It also suits NRIs who expect to return to India, because an FCNR deposit can run to maturity after you come back, and the interest stays tax-free while you are "resident but not ordinarily resident" (RNOR).

It suits you less if you need rupees in India soon, for a home loan EMI, a property purchase or family expenses. Then an NRE account is usually simpler.

›Breaking an FCNR deposit early

Most banks allow premature closure, but the rule is strict: if you close an FCNR deposit before it completes one year, no interest is paid at all. After a year, banks usually pay the rate for the period actually held, less a penalty of around 1%. Check your bank's terms before you book a 5-year deposit you may need sooner.

What is an NRE account?

NRE stands for Non-Resident External. It is a rupee account for money you earned outside India. When you send dollars or dirhams to it, the bank converts them into rupees at that day's rate. From then on the balance is in rupees, so a falling rupee reduces what you get back in dollars, but you can always send the full balance, with interest, back abroad.

›NRE account features

• Available as savings, current, recurring and fixed deposit accounts.
• Interest is exempt from Indian income tax while you are a non-resident.
• Principal and interest are fully repatriable, with no cap and no CA certificate needed.
• Credits allowed: inward remittances from abroad, transfers from other NRE or FCNR accounts, and interest on the account itself.
• Credits not allowed: rent, pension, salary or any other income that arises in India. That money belongs in NRO.
• NRE fixed deposits run for at least 1 year. Close one before a year and the bank pays no interest.

This is also the account to use for most rupee spending in India from foreign income: paying an EMI on a property you are buying, sending money to family, or investing in Indian mutual funds on a repatriable basis. If you are buying or selling property, our Property Sale Simplify team checks that the right account is used, because it affects how much you can take out later.

›Interest on an NRE account

NRE savings and deposit rates are set by each bank and move with Indian interest rates. They are usually higher than FCNR rates, because you are taking the currency risk instead of the bank. The interest is credited in rupees. For fixed-deposit rate comparisons across NRE, NRO and FCNR, see our guide to NRI fixed deposits.

What is an NRO account?

NRO stands for Non-Resident Ordinary. It is the account for money that arises in India: rent from a flat in Pune, a pension, dividends, interest, maturity of an old investment, or the proceeds of selling property. If you held a resident savings account before you moved abroad, FEMA requires it to be redesignated as NRO once you become an NRI.

›NRO account features and deposit rules

• Available as savings, current, recurring and fixed deposit accounts. NRO fixed deposits follow the same tenures as resident deposits, usually from 7 days.
• You can deposit Indian income and also money from abroad.
• The account can be held jointly with a resident Indian, for example a parent or spouse in India.
• Interest is taxable in India. The bank deducts TDS at 30% plus surcharge and 4% cess, unless you give it the documents to apply a lower treaty rate.
• Repatriation is capped at USD 1 million per financial year (April to March), counting all NRO balances you send abroad, including property sale proceeds.
• Each remittance needs a declaration on Form 145 and, above the threshold, a chartered accountant's certificate on Form 146 (formerly Forms 15CA and 15CB).

The USD 1 million limit and the paperwork are covered in detail in our NRO repatriation guide, and you can estimate a transfer with the repatriation calculator.

›Interest rate and tax on an NRO account

NRO deposit rates are usually the same as the bank's resident rates. The difference is the tax: interest is taxed in India, and TDS is deducted before it reaches you. Under the treaty between India and your country of residence, the rate on interest is commonly 10% to 15%. To claim it, give the bank a tax residency certificate, Form 10F and the declarations it asks for. You can compare treaty rates with our DTAA calculator.

NRE vs NRI account, and other common confusions

People often search for "NRE vs NRI account". There is no separate NRI account: "NRI account" is the everyday name for any of the three accounts above. If a bank offers you an "NRI savings account", ask whether it is NRE or NRO, because the tax and repatriation rules depend on that.

• NRE vs FCNR: both are tax-free and fully repatriable. NRE holds rupees and offers savings accounts; FCNR holds foreign currency and offers term deposits only.
• NRO vs NRE: NRO is for Indian income and is taxed; NRE is for foreign income and is tax-free in India.
• NRO vs FCNR: completely different purposes. NRO handles money from India; FCNR parks money from abroad without converting it.

Which account should you use? A step-by-step way to decide

1. 1List where your money comes from. Salary or savings earned abroad can go to NRE or FCNR. Rent, pension, dividends and property sale proceeds in India must go to NRO.
2. 2Decide which currency you will need the money in. If you will want it back in dollars or pounds, FCNR protects you from the rupee. If you will spend it in India, NRE is simpler.
3. 3Check how long you can lock the money away. FCNR and NRE deposits need at least a year to earn any interest.
4. 4Look at the tax where you live. If your home country taxes the interest anyway, the Indian tax exemption matters less and the rate after your local tax is what counts.
5. 5Open an NRO account if you have any Indian income at all, even if most of your money is in NRE or FCNR.
6. 6Keep the flows separate. Never put Indian income into NRE; it causes FEMA problems when you try to repatriate it.

If you are about to sell a property, the sale proceeds land in NRO. Read our guide to selling property in India as an NRI before you choose where the buyer pays, and see the guide to repatriating sale proceeds for how the money leaves India.

Worked example: FCNR or NRE for USD 100,000? (illustrative)

These numbers are illustrative only. The rates and exchange rates are assumptions, not quotes from any bank, and they ignore tax in your country of residence.

Anita lives in the US and has USD 100,000 she wants to park in India for 3 years. She compares a USD FCNR deposit at an assumed 4.5% a year with an NRE fixed deposit at an assumed 6.75% a year, both compounding annually. The exchange rate today is assumed to be Rs 88 per dollar.

The higher NRE rate wins only if the rupee falls by less than the gap between the two rates. In this example, a 3% yearly fall leaves Anita about USD 2,800 better off with FCNR; a 1% yearly fall leaves her about USD 3,950 better off with NRE. Nobody can predict the rupee, which is why many NRIs split their money between the two.

Now take an NRO example. Ravi, in the UK, keeps Rs 10 lakh of rent in an NRO fixed deposit at an assumed 7%. Interest for the year is Rs 70,000. Without treaty paperwork, the bank deducts TDS at 31.2% (30% plus 4% cess, with no surcharge at this income), which is Rs 21,840. If he gives the bank the documents to apply a 15% treaty rate, TDS falls to Rs 10,500. Any extra tax deducted can be claimed back in his Indian tax return.

Tax in your country of residence

The Indian exemption on NRE and FCNR interest applies only to Indian tax. Most countries where NRIs live tax their residents on worldwide income.

• USA: US citizens, green card holders and other US tax residents report NRE, NRO and FCNR interest on their US return. The accounts also count towards FBAR (if your foreign accounts together exceed USD 10,000 at any point in the year) and possibly Form 8938.
• UK: UK residents are generally taxed on foreign interest, subject to the rules that apply to their residence and domicile position. Indian tax deducted on NRO interest can usually be credited.
• Canada and Australia: residents report worldwide interest, with a foreign tax credit for Indian tax paid on NRO interest.
• UAE and most of the Gulf: there is no personal income tax, so the Indian tax-free status of NRE and FCNR interest is a real saving.

Our guide to FBAR and foreign account reporting covers the US forms in detail.

What happens to these accounts when you return to India

When you move back and become a resident under FEMA, tell your bank. NRE and NRO accounts must be redesignated as resident accounts, or the NRE balance moved to a Resident Foreign Currency (RFC) account if you want to keep foreign currency. An FCNR deposit can run until it matures, and its interest stays tax-free in India while you are RNOR for income-tax purposes. After maturity, the money moves to a resident or RFC account. Our returning NRI guide covers the timing.

Common mistakes with NRE, NRO and FCNR accounts

• Paying rent or pension into an NRE account. It mixes Indian income into a fully repatriable account and breaches FEMA.
• Keeping an old resident savings account after moving abroad, instead of converting it to NRO.
• Breaking an NRE or FCNR deposit before one year and losing all the interest.
• Assuming NRE interest is tax-free everywhere and leaving it off a US, UK or Canadian return.
• Letting the bank deduct 30% TDS on NRO interest when a treaty rate was available.
• Not planning the USD 1 million NRO limit before a large property sale, and having to spread the remittance across years without warning.
• Choosing an NRE deposit for money that will go back abroad in dollars, without weighing the currency risk.

More of these, with fixes, are in our list of common NRI banking mistakes.

How to choose the best bank for an NRE or NRO account

We do not rank banks, because the right one depends on where you live and what you need. These are the questions to ask before opening an account:

• Can you open the account fully online or by video KYC from your country, or will you need attested documents?
• Does the bank offer FCNR deposits in the currency you hold?
• What are the fees and exchange-rate margins on inward and outward remittances?
• Does it have a branch or office in your country, and what can that office actually do?
• How easily does it handle Forms 145 and 146 for NRO repatriation?
• Will it apply treaty rates on NRO interest once you submit your tax residency certificate?

If you live in the US, our list of Indian banks with branches in the USA explains what a US office can and cannot do for an NRE or NRO account. Your UPI and PAN also need to be linked correctly; see our guides to UPI for NRIs and PAN for NRIs.