A lot of Non-resident Indians (NRIs) are really interested in investing in FCNR (B) deposits ever since the government decided to cover the hedging costs for 3–5-year deposits. Banks have ramped up the interest rates on 3-5 year Foreign Currency Non-Resident (Bank)- FCNR (B)- deposits quite a bit. On top of that, banks like HSBC Bank are offering leverage as high as 19x.
But here’s a catch. Many NRIs, who are tax residents of Singapore, may not get the leverage advantage on FCNR (B) The Inland Revenue Authority Singapore (IRAS) has said that if an individual tax resident in Singapore pays interest to a bank in India, that interest is deemed to be derived from Singapore and Singapore withholding tax would apply on it.
