• kishore

    Can you please list few foreign banks that are providing this service

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India)

      I have listed few in the blog. Banks also depend on which country you are from. Local banks in your country may also offer the same provided they have some affiliation with the banks in India. However, the processing fees are usually higher for foreign banks. I think Citi, DBS, Standard Chartered are offering this product to their elite NRI customers.

  • Ruby

    Which bank would be a good bank to invest with?Is HDFC reasonably dependable?

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India)

      It depends on what how much money and where you want to invest and what is your definition of “reasonable dependable”. I would consider HDFC reasonably dependable. However, I would suggest you to do some research, inquire and satisfy yourself with the level of customer service.

      • Rahul

        Dear Jigar,
        We have a bank through their DIFC branch is offering this product at 19 times leverage yeilding 15%, I would like to understand the risk that i may be asked to settle the leveraged amount , say
        If RBI restricts the FCNR funds to be repatriated at maturity, could it happen that investor needs to settle the say 19 times leverage first ? I am Ok with the risk that my capital invested (without leverage) is not permitted to be repartriated, but i cannot settle/repay 19 times of my invested capital first in any instance.
        Appreciate your comments

        • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India)

          I would suggest you to contact the bank and get a written clarification in this regard.

          • Rahul

            Thx Jigar for your prompt reply and valuable suggestion

        • Sudipta

          Can you please let me know which bank in DIFC is offering this net return of 15%

  • Kunaal

    Hello, I have been offered this product at a 6 x Leverage, 4.77% FCNR Deposit rate, 3% Fixed interest cost on debt, min USD 250K client equity, 1.25% set up costs equating to an approx 11% return (compounded annually over 3 years). I am worried about the ‘worst case scenario’ of HDFC being unable to payback the principal on a 3 Year term deposit on maturity, as my total net worth is less than the leveraged amount. Is their any backing from RBI or any governmental authority to safeguard my deposit if the bank is unable to pay? Especially as this is a phenomenon or investment environment initiated by the RBI? As an individual, does it make sense to undertake an investment whereby I cannot survive the worst case scenario, no matter how unlikely the worst case of bank default may be in the foreseeable short term future? Your guidance would be appreciated.

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India)

      There is no backing by RBI. RBI backing is that they would honour the swap @ 3.5% premium per year with bank (HDFC). Whether HDFC pays you or not, is the risk. However, I consider HDFC as a sound bank and the risk would be minimal, close to zero (not zero). Thanks.

  • arvind

    Any idea which banks in UAE are still offering this product?

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India)

      Lot of banks in UAE – BOB, SBI, HDFC, etc. were offering. However, they had smaller window. For example, they would say I need US$100 million, if they get the required funds in 1-2 days, they would close the window and not offer the product.

  • B S

    Foreign banks like Citi, Standard Chartered etc have stopped offering this. Are any Indian banks still offering leveraged FCNR deposits/accounts?

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India)

      HDFC, Axis, SBI, BOB were offering the product but with effectively shorter window as explained in previous post. Thanks.

  • sanjiv shah

    Hi Jigar

    Your article is highly informative.
    I need some advice.
    I am based in UK and been offered the FCNR leveraged deposit by SBI UK.
    SBI is accepting only US dollar deposit. If I do the deposit, I will have to bear the FOREX conversion buy/ sell rate difference. Return yield is 11% pa for 3 yr deposit. Current exchange rate for £ to $ is 1.60. Where do you see the exchange rate heading in 3 years time? I am happy to take the risk as I have a good cushion of 11% return.
    Secondly, from taxation view point: How would the revenue office see my income. If I deposit £100000 and with leveraged amount (9 times) if my FCNR deposit is up to £1000000, and the FCNR deposit interest rate is 4.7%, effectively I am earning £47000 pa. ( I understand I will be paying interest on the loan of 900000 @3.96%pa). But would the UK tax revenue office see my earning as £47000 and pay full tax on that amount? Will I be able to offset the interest on loan as an expense?


    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India)

      1. I am almost 100% (I said almost), that currency risk between USD and GBP is less than 11% per year. I don’t think exchange rate would go unfavorable by 33% in 3 years.
      2. Please contact your tax attorney in UK. However, I would think only the difference of GBP 11,360 would be taxable. But, please contact your CA in UK. Thanks,

  • Ramesh Verma

    Indian public sector bank State Bank of India (SBI) through its Dubai Branch is offering this product with 9 times leverage, with a lock-in period of 5 years.

    I am 60, an NRI residing in Oman and wish to apply for the same in joint name with my wife 3 years younger. The minimum amount to be put in is $100,000 with a lock in period is 5 years. SBI will contribute 9 times i.e. $900,000. The applicants should have an asset base exceeding $500,000 and any reduction therein during coming 5 years will amount to a default. So will death of an applicant.
    Can you plz clarify:-
    1. What if I lose the NRI status during this period? Shall the principal sum n interest thereon be paid in USD only at maturity?Will it become taxable thereafter in India?
    2. Will it be eligible for repatriation if I continue to be an NRI for 5 years?
    3. Where do the leverage amount come from? SBI, RBI or any other source like Federal Reserve?
    4. What are the repercussions of a “Default”?
    5. Can it all be insured against any pitfall?
    Shall be grateful for your reply at my email as well.

    Best regards
    Ramesh Verma

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India)

      1. FCNR deposits are exempt from tax for NRIs and Resident but Not Ordinary residents. If you have stayed outside India for say 10 years, the FCNR FD interest would continue to be exempt from tax after about 3 years from your return. Thereafter, while you can hold the FCNR FD until maturity, it would be taxable.
      2. FCNR funds are repatriable funds so you can repatriate all funds. No restrictions, as of now.
      3. The leverage amount come from, in your case, would be from SBI Dubai branch.
      4. If SBI India would default, you would not get the deposits. Do you think SBI would default in 5 years? I sincerely doubt that.
      5. I am not sure about any default insurance.

  • Himanshu Parikh

    Can somebody give me information on banks in USA is offering the loan? phone #s will be great. I tried to talked to JPM Chase and they have no idea about what FCNR swap is.

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India)

      Unfortunately, Banks were not offering these services to US based clients mainly due to FATCA compliance. The Indian banks were offering to NRIs who can physically visit their branch in India. The swap window is now closed. Thanks.

  • Rihan

    dear sir,
    i am NRE can i invest FCNR forward book in different bank ?

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India)

      Yes, you could have. However, RBI has closed the swap window. Thanks

  • Chandni

    Hi Jigar,

    Thanks for the comprehensive article…

    A quick question , the article says the deadline for swaps was November 30th, 2013..

    Any updates on extension ?

    M in US n wish to open one …

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India)

      Unfortunately, RBI has not extended the deadline and the swap window is now closed. Thanks.

  • vinjal

    Dear Jigar,
    Thank u for the valuable article.

    I ( Indian NBFC) wanted to know i can utilise a foriegn party’s FCNR with foreign bank to get loan from Indian Bank ? How can a proceed with it?

    Or Else .. Can i get a loan from Indian Bank on the basis of the Bank Guarantee given by a foreign Bank?

    An Early reply would be appreciated.
    Thank YOU.


    which according to you is better –

    1. Leveraged FCNR deposit done by an NRI in UAE or any other country other than India, fetching him return of (around) 18 %, also taking the risk of unfixd LIBOR and fluctuative interest rate ?


    2. FCNR deposit done by an Indian bank like Indusind, where you get confirmed 12.5 % return on the FCNR B deposit made in INR ? Pls be advised here I am referring the FCNR to be made in INR and maturity would also be in INR.
    for instance – i invest Rs. 1,00,00,000 for 5 yr through this product, i get a return of around Rs. 1,70,00,000 at maturity (easily repatriable & tax free).

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India)

      1. Leveraged FCNR is WAY BETTER. No question about it. Return is higher, tax free in India and NO Currency Risk. However, the investment option is no longer available as RBI has not extended the swap window.

      2. Generally, I do no recommend FCNR with forward cover. You take currency risk and I am of the opinion that your partial return would be taxable. Please see my two blogs in this regard for details: 1. Should NRIs invest in FCNR deposits with Forward Cover? 2. Are FCNR deposits with Forward Cover Completely Tax free for NRIs in India?
      For your case, I can not tell with the limited information. If you still want to do it, park only a part of money. You should not park all money at one place as there are many good options available for investments in India. Once you enter, it would be difficult, if not impossible, to get out.

  • Harshit

    Hi Jigar,
    Can you suggest me which bank would be preferd for NRI banking? Had gone through IDBI Bank NRI service or some other bank. As IDBI Bank offers basic NRI banking products like Non Resident Rupee Checking Account, Non Resident Rupee Term Deposits and Foreign Currency Non Resident Deposit.
    Please suggest me. check this migh it would eassy to suggest me

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India)

      All banks would offer you the NRO, NRE and FCNR accounts. The selection of bank would depend on your objectives or nature of work or service expectations, amount of investments, among other factors. I have nothing for or against any bank; the perfect bank for you would depend on your requirements. Thanks.

  • KC

    Hi Jigar,

    Does the FATCA rule apply to all deposits held with the institution – like NRE FDs, FCNR, etc or just to FCNR. Does that mean as the rupee strengthens, the closer you are to the FATCA reporting limits?


    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India)

      1. Yes, FATCA rule apply to all deposits including NRE, NRO and FCNR – both Fixed deposits and savings account balance as well.
      2. Yes. The exchange rate for all currencies (including INR) published by the US Treasury are to be used for conversion.

  • Deepak Jain

    Hi Jigar

    Its difficult to get the interest rates on FCNR – Forward Cover from different banks when you are in USA as they have not listed interest rates on there website and customer care do not know this. Can you publish the interest rates for 5 Year deposit for mainline banks offering currently. As you mentioned in your blog banks offering in the range of 12%-20%. Even if you can mention for banks you know, it will be appreciable and knowledgeable for all.


    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India)

      Forward premium on various currencies fluctuates on a daily basis so it would be difficult or practically not viable for banks to list the FCNR + forward cover rates on the website. However, you may be able to get the FCNR rates on the website. Also, the Leverage FCNR deposit scheme has ended as the RBI did not extend the swap window. Thanks.

  • Krishan Kanhaiyya

    Dear Mr Patel, I read your very informative article with great interest. It appears that the interest rate of FCNR is fixed with respect to LIBOR/SWAP rates displayed by FEDAI . The foreign currency in FCNR is converted to Rupees and a forward contract is taken to reconvert into original currency at maturity. Since September 2013, the banks enters into a swap with RBI, otherwise they were swapping in the market for reconversion.

    Does all this mean that FCNR is an swap?

    Many thanks


    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India)

      For NRI or investor, FCNR is not a swap but FD. However, the bank does not want to take the currency risk so would hedge the risk by entering swap (giving $ to RBI now for $ on maturity) or a forward contract (giving $ loans to clients now and entering forward contract for $ on maturity). Thanks.

      • Krishan Kanhaiyya

        Dear Jigar,
        Thank you for that reply.

        What I was trying to understand was the underlying nature of FCNR. From your reply, it would appear that the FCNR is actually a swap.
        I also see from the FCNR account opening forms of all banks that they will pass on the swap costs to the customer in case of premature termination.
        So to come back to my original query, is the FCNR a swap?

        Many thanks

        • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India)

          For investor’s perspective, it is an investment. And, for bank’s perspective, it depends on bank’s requirement of foreign exchange for re-lending and/or how banks manage their foreign exchange risk. They may keep it open and decide not to hedge. If bank can’t keep forex and has to convert in INR, you may argue it to be a swap as they would be paying forex on maturity. But, it is just one of many ways how they manage their forex risk and bank may or may not do it. In short, I don’t think FCNR is a swap. Thanks.

  • Sameer

    Thank you for informative article.
    I am attending US university as masters student on non immigrant visa and will be able to save 1000$ per month from assistantship. Is it advisable to invest it in SBI fcnr forward cover after 2 months? I’d like to get money back after one year. What other options do I have, except NRE?

    I would pay tax in us on my assistantship but on non immigrant visa would not pay on interest earned from banks.

    Any help is appreciated

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India)

      While there are many options for investments in India, if you need the money back after 1 year, I would suggest to keep in USA or in FCNR FD of 1 year. There is currency risk in NRE FD and equity is a risky investment in short term (1 year). Thanks.

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