Module: | FCNR(B) & Loan Regulations
Q11: Vimal, an NRI working in Germany, earns his salary in Euros. He is concerned about the fluctuation of the Indian Rupee, and wants to invest his savings in India, without exposing his principal to exchange rate risk. He decides to open a Foreign Currency Non-Resident (Bank) [FCNR(B)] account. Which of the following statements, regarding this account, are correct?
1. The account is maintained in permitted foreign currencies (e.g., Euro, USD), so there is no conversion to Indian Rupees.
2. The principal amount, and the interest earned, are fully repatriable outside India.
3. The interest earned on this deposit, is exempt from Income Tax in India, as long as Vimal remains an NRI.
4. He can deposit his Indian Rupee savings into this account, to convert them into Euros.
2. The principal amount, and the interest earned, are fully repatriable outside India.
3. The interest earned on this deposit, is exempt from Income Tax in India, as long as Vimal remains an NRI.
4. He can deposit his Indian Rupee savings into this account, to convert them into Euros.
✅ Correct Answer: A
FCNR(B) deposits are held in foreign currency, avoiding exchange risk.
Principal and interest are fully repatriable and tax-exempt.
Indian Rupees cannot be used to open/credit these accounts.
Principal and interest are fully repatriable and tax-exempt.
Indian Rupees cannot be used to open/credit these accounts.