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All NRIs

FCNR deposit calculator: borrowing, tax and fees

Test whether borrowing to fund an FCNR deposit works with your own rates, tax and fees.

How this works: An FCNR deposit is held in foreign currency, so unlike an NRE FD there is no rupee risk — which is why some NRIs borrow at home and park the money in FCNR to pocket the spread. This checks whether that spread survives the two things people forget: tax in your country of residence, and the fee on the loan. Rates last updated: 2026-10-26.

The FCNR deposit

Gulf residents: AED is pegged to the dollar, so USD is the usual choice.

Worth knowing: DICGC deposit insurance covers ₹5 lakh per depositor per bank (about here). Beyond that you rely on the bank's own strength — seldom a concern at the large banks that dominate FCNR, several of which the RBI designates as systemically important.

Best available: at .

We don't publish comparison rates for deposits yet — enter the rate your bank quotes.

The loan funding it

Unsecured personal loans typically run 6–10%; secured or loan-against-assets can be lower.

Net position over

on borrowed at % and deposited at %

What this means

  • After tax on the interest, with the loan interest set against it, the real spread is a year: the loan costs more than the deposit earns before the fee is even counted.
  • Deposit insurance in India covers ₹5 lakh per depositor per bank, about , or of this deposit. The rest depends on the bank.
  • The deposit stays in , but a loan where you live is likely to be in . A move between the two over can matter more than the spread.
  • The deposit rate is fixed for the term; most personal loans and lines of credit are not. Recheck if your loan rate can rise.
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Where the money goes

Interest earned on the deposit
Tax on that interest at home
Interest paid on the loan
Tax relief on loan interest
Arrangement fee
Net

Why the spread disappears

The phrase that misleads everyone is "FCNR interest is tax-free". It is tax-free in India — not where you live.

Headline deposit rate
After your % tax
Your cost of borrowing
Real spread

The asymmetry is the problem: your interest is taxed, while personal loan interest usually gets no relief. Gulf and Singapore residents avoid this because they pay no personal income tax on it.

Please read this before borrowing to invest. This is leverage. Even where the sum works on paper, the gain is small and the risks are not: break the deposit before 12 months and most banks pay no interest at all, while the loan keeps running. A floating-rate loan can rise past your fixed deposit rate and you cannot exit. And the whole exercise commits you to repayments regardless of what happens to your job or income. A thin, taxed spread is rarely worth that. If you have the cash already, an FCNR deposit is a perfectly sensible unleveraged place to park foreign currency — see the FCNR rate comparison.

Estimates only. Interest compounds half-yearly on the deposit; the loan is modelled as interest-only with the principal repaid at maturity, which is the arrangement most favourable to the borrower — an amortising loan does worse. Excludes early-repayment charges, currency conversion costs if your loan is in another currency, and any Indian reporting obligations. Not financial advice.

NRIWallah team

Updated September 2026 · 2 min read

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Use the calculator above to test whether borrowing to fund an FCNR deposit still works after tax and fees. An FCNR deposit is held in foreign currency, so the rupee cannot erode your return. That leads some NRIs to borrow in the same currency, put the money into an FCNR deposit and keep the difference between the two interest rates. The idea is popular among NRIs in the Gulf, and some banks sell the loan and the deposit together.

What the idea leaves out

Tax. FCNR interest is tax-free in India, but not necessarily where you live. If you are tax resident in the UK, the US, Canada or Australia, the interest is part of your worldwide income and taxed at your marginal rate, while the interest you pay on a personal loan usually gets no tax relief. A 4.5% deposit is worth about 2.7% after tax to a UK higher-rate taxpayer. A spread that looked like a full percentage point can turn negative. Residents of the Gulf states and Singapore, who pay no personal income tax on it, avoid this.

Fees. Arrangement fees of 1% or 2% are common on personal loans and fall in the first year. On a thin spread over a short term, the fee alone can exceed the expected gain.

For a UK or US resident, most realistic combinations of rates produce a loss.

When it can work

It can work for a Gulf or Singapore resident with cheap secured borrowing and little or no arrangement fee. Even then, look at the size of the gain. A few hundred dollars over three years is a small reward for committing to loan repayments whatever happens to your job. A floating-rate loan can rise above your fixed deposit rate, and an FCNR deposit broken within twelve months usually earns no interest at all, while the loan continues.

Using FCNR without borrowing

FCNR deposits are a good home for foreign currency you already hold and do not want exposed to the rupee: money for a purchase abroad, or savings you expect to spend in that currency. See the current FCNR rates, and our guide to which currency to hold.

NRIWallah does not provide financial advice and does not recommend borrowing to invest. The calculator assumes an interest-only loan, the structure most favourable to the borrower, and excludes early-repayment charges and conversion costs where the loan and deposit are in different currencies. Speak to a qualified adviser before borrowing to invest.

Common questions

A Foreign Currency Non-Resident (Bank) deposit is a term deposit with an Indian bank held in a foreign currency, such as US dollars, pounds, euros, Canadian or Australian dollars, yen or Singapore dollars, for one to five years. You deposit dollars and get dollars back, so there is no rupee conversion and no currency risk. The interest is tax-free in India while you are an NRI, and the money is fully repatriable.
Yes. NRE, NRO and FCNR deposits are all covered by DICGC insurance up to ₹5 lakh per depositor per bank, for principal and interest combined, with all branches of a bank counted together. On a large FCNR deposit that covers only part of the balance, so above it you rely on the bank’s own strength. The limit applies to each bank separately, so splitting a large sum across two banks increases the insured amount.
An NRO deposit holds rupees from Indian income such as rent or dividends; its interest is taxed in India, with TDS of 30% plus cess, and repatriation is capped at USD 1 million a year. An NRE deposit holds rupees converted from money earned abroad; it is tax-free in India and fully repatriable. An FCNR deposit holds foreign currency, is tax-free in India and carries no rupee risk. Rupee deposits usually pay higher headline rates because your return depends on what the rupee does. This calculator models FCNR only; the FD rate comparison shows all three, and the FD calculator models the currency effect on NRE deposits.
That is a different and more sensible transaction. Indian banks lend against FCNR deposits, typically up to about 90% of the value, so you can raise cash without breaking the deposit and losing its interest. Because the loan is secured on your own deposit, the rate is usually close to the deposit rate plus a small margin. It is a way to meet a short-term need, not a bet on a spread.

Every rate and threshold here is sourced, dated and shown on the page — but tax rules change, and we would rather be told than be wrong. Reports go to the team that maintains the tool. If you can point at the official source, that gets it fixed fastest.

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Prefer email? admin@nriwallah.com. How we source and review these numbers is set out in our methodology.

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