|With the rupee continuing to remain volatile, the Foreign currency Non-Resident (FCNR) account can be a good option for Non-Resident Indians (NRIs) looking to invest in India without worrying about currency risks. Consider the following statements:
|1. An FCNR account is a savings deposit account that can be maintained by NRIs and PIOs in foreign currency.
|2. FCNR account can be maintained in any permitted currency. Which of the statements given above is/are correct?
A) 1 only
B) 2 only
C) Both 1 and 2
D) neither 1 nor 2
Correct Answer: B
Solution :[b] An FCNR account is a term deposit account that can be maintained by NRIs and PIOs in foreign currency. Thus, FCNRs are not savings accounts but fixed deposit accounts. Prior to 2011, FCNR deposits were allowed to be maintained in six currencies: US dollar, Pound Sterling (GBP), Euro, Japanese Yen, Australian dollar and Canadian dollar. However, in October 2011, the RBI decided that authorised dealer banks in India may be permitted to accept FCNR deposits in any permitted currency. 'Permitted currency' for this purpose would mean a foreign currency which is freely convertible and popularly include Danish Krone, Swiss Frank and Swedish Krona among others.
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