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NRIs often place their repatriable funds in the following term deposits with the banks either in Indian Rupees or in Foreign Currency with certain objectives.

  • NRE Rupee Term Deposits- To avail of higher rate of interest
  • FCNR (B) term Deposit- To safe guard from exchange rate risk.

However, both these schemes have inherent disadvantages. In case of NRE Rupee Term Deposit the depositor is exposed to possible exchange rate fluctuations though returns are comparatively higher. It is also possible that any advantage in rate of interest can be wiped out due to depreciation of rupee at the time of maturity/repatriation. In case of FCNR (B) deposit though depositor is guaranteed against adverse fluctuation of exchange rates, interest rates are comparatively low.

Therefore, as a better investments option for NRIs which not only ensures better returns but also insulate/mitigate exchange rate risk, the Bank has a deposit scheme with the name Union Smart Foreign Currency Scheme. This scheme gives better yields when the forward rates for Foreign Currency to Rupee are at a discount.

Advantages of the Scheme:

  • Earn higher returns in foreign currency as compared to FCNR (B) Deposit.
  • Protects against exchange loss
  • Interest earned is totally free from Indian Income tax ( as per existing norms)
  • Maturity Proceeds (both principal + Interest) are freely and fully repatriable

The broad features of the scheme are given below:

Who can open the account



To enable Depositors to maximize the yield on the Foreign Currency Resources/Funds.

Period of Deposit

1 year

Rate of Interest

As applicable to NRE Term Deposit for 12 Months

Other Conditions

The deposit should be placed under NRE-DRC scheme only.

  • All rules relating to NRI deposits viz Joint Accounts, Nominations, Additions/Deletion of Names, interest application etc are the same as applicable to NRE Term Deposits.
  • Minimum Amount of Deposit is USD 10,000 or equivalent
  • No premature extension is permitted
  • Premature withdrawal of deposit will not be permitted. Under exceptional circumstances  (to be decided by the branch head), if premature withdrawal is permitted then the depositor will be required to bear the losses both by way of penalty for premature closure and on account of cancellation of forward contract in addition to other charges/fees incurred by the bank. However, gains, if any, made by the bank on account of cancellation of forward contract will not be passed on to the depositor.