Category: Knowledge and Concepts

When you sell any capital asset like a house, gold, bonds or debt mutual funds over a long period, you generally make a PROFIT, which is called as Capital gains. This is treated differently from “interest income” which you get from fixed deposits and these capital gains are taxed at 20%.

In case of selling house, these amounts can be quite big and if you reinvest these capital gains, you will not have to pay any taxes.

However at times, an investor may not want to invest in another house and also not willing to pay taxes.

54 EC bonds can help you in saving the capital gains tax.

What are 54 EC Bonds?

54EC bonds (capital gains bonds) are the best investment option through which an investor can save long-term capital gain taxes.

54EC bonds are specifically meant for investors earning long-term capital gains and would like tax exemption on these gains. The tax deduction is available under section 54EC of the Income Tax Act. However, 54EC bonds can only save long term capital gains taxes, and not short term capital gains taxes. Check out our Capital Gains Tax Calculator

The maximum limit for investing in 54EC bonds is Rs. 50 Lacs.

As we said above, an individual can invest in these bonds after receiving capital gains from selling a property, sale of land, or building (residential or commercial).

If you want to save your capital gains, you will have to make your investments in 54 EC bonds within 6 months from the date of sale of the property or before filing your income tax returns.

Features & Benefits of 54 EC Bonds

• As 54EC bonds are generally AAA rated and hence it is the safest and secure bond as it is backed by the Government of India.
• Interest earned on these 54EC bonds is taxable in nature. So while you don’t pay any tax on the lump sum you got after selling the house or another property, the interest earned from these bonds are taxable.
• No TDS is deducted on interest from 54EC bonds and wealth tax is exempted.
• 54EC bonds come with a lock-in period of 5 years and are non-transferable in nature.
• The minimum investment an investor can make in 54EC bonds is 1 bond amounting to Rs. 10,000 and the maximum investment in 54EC bonds is 500 bonds amounting to Rs 50 lakhs in a financial year.
• The interest these bonds offer is at 5.75% which is payable annually. This is not very high interest, and if you pay taxes on these, the final post tax returns will be much lower.
• These bonds can be held in Demat Form and Physical Form as well.

Eligible Bonds under section 54 EC –

So when we say 54 EC bonds, it’s not exactly a product in itself. There are actually 4 types of bonds which come under the definition of 54 EC bonds. They are as follows –

• REC (Rural Electrification Corporation) – Download form
• NHAI (National Highways Authority of India) – Download form
• IRFC (Indian Railway Finance Corporation) – Download form
• PFC (Power Finance Corporation Ltd- Download form

Let us see the comparison between REC and NHAI as these are the most popular options to invest.

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What if you don’t invest in 54 EC bonds?

If you don’t want to invest in these 54 EC bonds and rather want to invest in other financial products like a fixed deposit, debt mutual fund or equity mutual funds – then remember that first you will have to pay the tax, and then you can invest only remaining amount which may fetch higher return compared to 54 EC bonds returns.

However a quick calculation shows that you are better off investing in EC bonds, if you are not looking forward to invest in equity mutual funds and are ready to take risk. In general it’s usually a good idea to put money in 54 EC bonds and over 5 yrs, you will have decent amount of money.

Only if you are ready to take high risk, and are not looking for lock in, then you can put this money in equity mutual funds. Below is a comparison between all 4 options we talked about

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Note that the only option which has some chances of beating the 54 EC bonds returns is equity, but you have to remember that this is not an option for everyone. Only one who can take right decisions about equity and is ready to take higher risk / high reward path should get into it.

Otherwise, overall investing in 54 EC bonds looks like the best option, but it will come with strict lock in.

So, this was all that I wanted to share in this article. Let me know your queries in the comment section.

The telecom and financial services have drastically changed over the last 15-20 yrs. and this means that you can do lots of things over your phone now. You don’t need to go to bank for everything. Now your mobile itself is a bank and it will let you transfer money to anyone and transact with just a click of the button.

While this is wonderful news, it’s also a bad news because various kind of cyber frauds have started happening from last few years. Today I am going to share about one such fraud called as “SIM Swap Fraud”

I also requested one of person I know personally who actually lost money because of this fraud, and I requested him to jot down what exactly happened and steps they took after the fraud happened.

What is SIM Swap Fraud?

SIM swap fraud is a very sophisticated type of cyber fraud, where the attacker first blocks your sim card, and then gets a duplicate sim issued and gets access to all OTP/SMS which are required to make the transactions. This also means that they put a request to your mobile company with forged documents or online and if you have not secured your data/documents – it’s not very tough to get it done.

On top of it, if you do not act fast or take things lightly – the chances of fraud getting successful is very high.

People have lost amounts ranging from few Lacs to few crores. Just have a look at the below screenshot

The sim swap frauds are also known as SIM splitting, SIM jacking, SIM hijacking, or port-out scamming in different countries.

A real life case of an NRI who lost money from his bank account

So a few weeks back, one of the NRI readers of this blog mailed me asking for help on a fraud which happened in his bank account and he lost money.

Luckily the amount was just in thousands. I looked at his email and soon realized that this is a case of SIM SWAP fraud. While he has not got the money till now, I asked him to share the entire incident with all of us so that we can learn from this incident.

Please go through his experience which I got by email.

Hello Manish,

Greetings and appreciate your thoughtfulness to create awareness to this fraud,

So the story goes this way

My wife has a savings account in ICICI and me being NRI she travels to visit me for more than 5 months in a year as such I had linked my Sisters Phone number for net banking and all was going well. as local numbers don’t work in the country I live.

Recently my sister was having issues with idea sim card and she had registered a complaint with idea, and she was told a customer care will coordinate with her. then there was the lockdown and curfew and banks shops etc all closed.

One day a person called her and said he was from idea customer care and she needs to upgrade her sim from 3G to 4G and to do that she needs to text him a code and a sim card no a 20 digit number, due to lockdown since idea center is closed this is her option, which she did, she got a call back saying it will take about 4 hours for this upgrade and she may not get coverage until then.

my email was linked to that ICICI account and I got an email that there was a failed attempt to access my online account.

I replied to ICICI customer care and there was no reply. ( Got reply after two days, Standard written email do not share otp, password etc with any one and if suspicious report to ICIC customer care)

But I was able to log into net banking and did not find anything suspicious.

The next day I was off and was not online to check emails for full day in the evening I saw 8 emails from ICICI auto emails, password changed, new beneficiary added, OTP sent to Registered mobile, amount transferred to beneficiary account. balance in my account is now zero.

Now it’s a Saturday bank is closed, Lockdown cannot go out, customer care lines are busy and on hold for 25 min, and finally when she got on line with customer care they said she is not calling from registered mobile and they cannot help us.

The damage was done. The hacker took control of the sim and was getting OTP and had reseted the password using registered phone number.

The complaints we made

Sister went to idea and narrated the incident and idea said this normally does not happen this way and only authorized person in idea can do the sim swap and said they will investigate it

Wife went to police to complain, they are clueless on this matter and were more interested on knowing the fraud for their personal reason and challenging wife stating what she was telling can never happen and they never heard of such case and there must me something else which has happened and not sim swap. but when my wife raised her tone they took the complaint and said they will forward it to cyber branch.

Till date no positive lead.

Wife went to bank to complain, they saw the log and found the transaction is done through correct channel and there is no fraud, Password changed by registered mobile, otp sent to registered mobile and all things done legally without breach..

However as there was a police complain they traced the beneficiary account and put a freeze and lien on that account (In case he deposits money that money will be directly transferred to my account).

We changed the mobile number and now my wife gave her new local number, and they said not to use the account for some time till the investigation is over.

that night wife get a call from ICICI customer care saying we have registered your complain and your money will be transferred to your account tomorrow.

Wife goes to ICIC and meets manager she say no this case is not solved and normally it takes more than 15days for this and this call is not from us.

Wonder how the hacker got this number which was just given to ICICI, also though ICICI said they deleted the old phone number and registered the new phone number my sister is still getting messages when we complain to ICICI they say it cannot be and when shown proof via screen shots said we will forward to our IT dept.

So till date this is the final summary

Idea mobile operator claims no responsibility of damage done to bank account but their responsibility is to give control of the sim card back to my sister in 24 hours and they did it

Bank does not take any responsibility as the transaction was done by the registered mobile number

Police claims it was out carelessness to give the 20 digit number to the hacker and they can do nothing

I Learnt a very good lesson and will be more careful in these matters.

Jerry

From the real life incident of the above, I can see that it’s a bit of everything. Some bad luck, some carelessness, some ignorance and a lot of smart work by fraudster. These sim swap frauds are not easy to achieve as there are lots of things which needs to happen.

Let us now look at exactly what are the steps which are involved into Sim swap fraud.

4 Steps of Sim Swap Fraud – How it can happen to you?

Let’s understand how exactly a sim swap fraud happens through 4 steps process

Step 1 – Fraudster steals your important data

In this first step, the fraudster gets your personal information like your PAN number, Bank account number, phone number, your net banking password, and any other details which are essential for an online transaction. These things can be acquired using various methods like Email/Phone/SMS frauds or by hacking into your personal devices .

Sometimes there can be data theft by getting access to your documents which might be lying with someone (imagine you give your laptop for repair and some file has all the data or imagine you leave your bank statement at a Xerox shop)

Step 2 – Placing a request for SIM Swap with your SIM company

The next step is quite important and the main step, where the fraudster places the request for sim swap with your sim company by posing a fake identity and giving all relevant documents or through online mode.

Here the person may also call you to inform you about you posing as the sim company representative and tells you a lie that your sim will be active in some time as there is an upgrade going on or something like that.

You will generally get a sms or email from sim company telling you that your sim swap request will be complete soon.

DONT IGNORE THIS SMS at any cost. This is exactly where a customer mind presence is required and you have to act fast. A lot of people who do not understand how thing work online fall prey to it. Imagine if your 70 yr old father gets this kind of sms, he might not understand exactly what it is!

Step 3 – Doing the transaction

Once the sim swap request is processed, the game is almost over because the fraudster now has all the login details and the main thing – THE NEW PHONE NUMBER which is linked to the net banking/card.

Now all they have to do is add a beneficiary and complete the transaction

Step 4 – The fraud happens

And finally, the OTP comes to the new phone number and the transaction is complete. This is the point, where you loose the money and getting it back it quite tough. I strongly suggest that you read these 21 tips you should follow to secure your banking transactions

Some Safety Tips which can prevent you from such Frauds –

• If your network is lost for a very long time like more than 20-30 min, be alert and enquire about it from your mobile operator
• If you ever get a sms/email alerting you that your sim swap request is received, make sure you contact your bank immediately and report this incident. If possible login to your net banking and change your passwords the same moment
• Never share your the 20 digits mentioned on the back of sim card to anyone ever on call. This 20 digits are required for a successful sim swap
• Don’t entertain anyone asking for any kind of OTP or your accounts details
• Register for Alerts (SMS and Email) so that whenever there is any activity on your bank account you will receive an alert.
• Always check your bank statements and online banking transaction history regularly to help identify any issues or irregularities.
• Have strong passwords in your phone and computers. Don’t keep simple passwords which can be guessed by others
• If there is any cyber fraud, immediately inform the cyber cell or the best thing is to file a FIR in local police station.
• Don’t root your phone, if you are not a tech expert.
• Don’t install unverified apps on your mobile or laptop. A lot of these programs can read your computer or phone data
• Don’t leave your important documents Xerox here and there. At times we feel, nothing will happen – but bad things happen!

Do watch this video on preventing sim swap fraud!

Don’t be over confident that it can’t happen to you

Whenever we come to hear about these types of frauds any kind of fraud, the first thought as an investor comes to our mind is that no matter what happens, I will not fall prey to any such frauds.

This is nothing but overconfidence. Be alert and always pay attention to small signals which might be pointing to this kind of frauds, especially when you keep too much money in your bank account.

Today, we will see what exactly happens when a stock is delisted from stock market? What happens to the shareholders and how they get the money back for their shares?

To understand de-listing, first let’s understand meaning of “Listing”

So when a private company wants to be become a public limited company and offer its share to open public for buying and selling, then it has to get it registered with stock market and make its shares open to public and that is called as “listing”. Once a stock lists on the stock market, it then has to follow up various processes and comply with many rules and regulations.

Meaning of Delisting

When a company wants to de-register its stocks from stock exchange and no longer wants to let public buy and sell its shares, then it’s called delisting process. In most of the cases, the stock holders will get back the value of their shares on the price which is determined at the time of delisting.

There are two kind of delisting

Voluntary delisting

Voluntary delisting, as the name suggests happens when the company takes the decision of delisting themselves. It happens mainly because company does not see any benefit in keeping its shares on stock exchange and wants more control. In this case, the buyback price offered to the shareholders is more price than the prevailing stock price. Common reasons behind voluntary delisting are

• Merger with another company
• Looking for more control and simplification within company

Involuntary delisting

• Involuntary delisting happens not out of choice, but when the situation forces for the delisting. When this happens, mostly the shareholders don’t get the good price, because anyways the stock prices must be at lowest levels. Some of the common reasons for involuntary delisting are
• Violations of Regulations
• Failure to meet the minimum financial expectations
• Company is bankrupt or ceases its 0perations
• No longer meets the listing requirement on stock exchange

How the investor gets their money back once the de-listing happens?

In case of Voluntary delisting

Understand that if its voluntary delisting, then it’s happening because the company wants it to happen. In this case, there is enough time for shareholders to get back their money and it’s mostly the transaction between the promoter and shareholders. In this case, you can expect to sell your shares back to promoters at premium price.

There is around 1 yr. of time for shareholders to get back their money and it happens through a process called as “Reverse book building” process

In case of Involuntary delisting

When involuntary delisting happens, it’s a case of violation of norms/regulations most of the times and it sends a negative shock among stock holders. Most of the times, the stock is already quoting at a lower price. In this case, whatever price is offered by company, it’s suggested to take it and close the matter.

In any kind of listing, it’s not suggested to wait for future listing of the company because you have no idea when it will happen again. It might never happen. Also it gets very tough to find a buyer off the market and get a good deal.

Recent delisting case of Vedanta Ltd

Let’s talk a bit about the recent case of Vedanta Ltd delisting news. Recently, Vedanta Ltd has decided to delist from stock exchanges because of “Corporate simplification”. They feel it will enhance operational and financial flexibility in a capital intensive business.

It was a case of Voluntary Delisting, and hence there is enough time for delisting process and shareholders don’t have to panic at all. The company has decided to buy out the minority and non-promoters shares back from public. They have proposed an “indicative offer price” of Rs 87.5 a share which is around 10% more than the closing market price last of 79.6.

Now the next set of process will follow, but you don’t need to get into details. The point is that the delisting will happen and shareholders will get a good exit.

Here is a small list of few companies which got delisted in the last 10 year from BSE

1. Maharaja Shree Umaid Mills Ltd on Feb 2, 2015
2. Shantivijay Jewels Ltd on Jan 20, 2015
3. Novopan Industries Ltd on Nov 10, 2014
4. Vishnu Sugar Mills Ltd on Jun 30, 2014
5. English Indian Clay Ltd on Jun 4, 2014
6. Rhodia Speciality Chemical India Ltd on May 28, 2014
7. Reliance Media Works Ltd on May 6, 2014
8. Reliance Broadcast Network Ltd on March 28, 2014
9. Gujarat Organics Ltd on Jan 9, 2014
10. Chettinad Cement Corporation Ltd on July 8, 2013

Hope you all have understood the various aspect of delisting of a company from the stock exchange. If you all have any questions, you can put across in the comment section and I will get back to you on your queries asap.

I generally come across some very basic insurance related queries like

• “I am not a smoker right now, if I buy a term plan – will I have to inform the company in case I start smoking in future”
• “My father just got diagnosed with diabetes, Can I get a health insurance which covers that?”
• “Why my premium have gone up after medicals even though I am fit and healthy?”
• “How can an insurance company pay me Rs 1 crore, when they are just charging Rs 15,000 as premium?”

All these questions are very genuine questions and if someone does not understand the principles of Insurance, they will ask them.

So today I am going to share with you the 7 principles on which the insurance industry runs. These are basic principles on which the business of insurance is based on. I hope these 7 principles will clear our all the myths regarding insurance.

Let’s start

Principle #1 – Principle of Utmost Good Faith (Uberrimae fidei)

The principle of utmost good faith is the most basic and primary level principle of insurance and it applies to all kind insurance policies. It simply means that the person who is getting insured must willingly disclose to the insurer, all his complete & true information regarding the subject matter of insurance.

The insurer’s liability exists only on the assumption that no material fact is hidden or falsely presented by the person getting insured.

There is a process called as “Underwriting” in insurance industry which is the activity of studying the risk and assigning the premium value for the case and it’s very important that the person buying any kind of insurance tells all the facts correctly and does not hide it.

If you think about term plan or health insurance, you need to correctly mention things like

• If you are a smoker or drinker
• Your family illness history
• The Industry you work for
• Your Income
• Your Age
• Your current illnesses (which you are already aware of)

If you do not tell these things correctly, you are violating the “Principle of utmost good faith” here and it can impact your insurance claim process in future.

Principle #2 – Principle of Insurable Interest

This principle says that the person who is taking insurance should have some insurable interest in that thing which is getting insured. So if there will be financial loss to the person if the insured object gets destroyed. If this is not the case, insurance cannot be taken

So when a breadwinner takes life insurance for his life, it makes sense because incase the person dies, there will be financial loss to family .

In the same way, you can get your car, bike, home, gold insured because you have insurable interest in that object. You can’t get your neighbor car insured and benefit because you do not have insurable interest in that.

Principle #3 – Principle of Indemnity

Principle of Indemnity says that Insurance is not to make profit, but only to compensate you against the losses incurred. It’s an assurance to restore the same position which was there before the loss.

So the compensation paid cannot be more than the losses incurred.

In term plan, people ask why companies ask for income details. It’s to make sure that a person takes limited insurance which goes with his financial status and is good enough to restore back his family life style which was there in existence.

If a person earns Rs 1 lacs per month. Then Rs 2-3 crores is a good enough life insurance for the person and they cannot take Rs 500 crore insurance even if they can pay the premiums, because then the intention is not to cover your financial loss but to benefit/profit from the insurance policy.

That’s exactly the reason why house-wife does not get very high insurance, because the motive is to profit from the death of non-earning member and not replace the income which that person was earning.

Principle #4 – Principle of Contribution

This principle is just a corollary of the principle of indemnity. As per this principle, the insured company are liable to pay only their own contribution and they have right to recover back the excess money paid from other insurer.

Let’s see how it works.

Imagine you have two health insurance policies A and B , both for Rs 5 lacs sum assured. If there is a claim for Rs 4 lacs, then each insurer is liable to contribute Rs 2 lacs each for this claim.

However in real life, you as insurer can go to any insurer and claim it from them or divide it between insurers. So you can claim full Rs 4 lacs either from policy A or policy B or Rs 2 lacs from A and B each.

However if you claim Rs 4 lacs from company A, in that case company A can recover back Rs 2 lacs from company B as per the principle of contribution.

Principle #5 – Principle of Subrogation

As per this principle, once the insured is paid for the losses due to damage to his insured property, then the ownership right of such property shifts to the insurer. So if your car / bike / house / valuables which you have insured is fully damaged and once you get compensation from insurance company, then they get the ownership of the item and now they can sell off the remains to recover their dues by that process
You can’t benefit from the remains of that item.

Imagine this scenario : You have car insurance and the car is stolen. The insurance company will pay you the full claim amount. However now the ownership rights are transferred to the insurance company and if the car is found in future by Police, it will be owned by insurance company

Also, imagine a scenario where a car is insured and the car is badly damaged beyond the use. In that case the insurance company will pay you the claim fully. Now you can’t say that you will still sell off the car parts by getting it repaired because you lose the rights to property.

One more thing ..

As per this principle, the insurer will try to recover their losses from other party later as if they were at your place. Let me give you an example

Let’s say your house is insured for Rs 1 crore. Because of some reason, let’s say your neighbor negligence there was a fire in your house and your house is fully damaged. In this case you will claim from insurance company, and get the money.

But after that the company will try to recover the losses from the culprit in the way you might have done it if there was no insurance. So might file a case against the neighbor’s in court claiming for damages.

Principle #6 – Principle of Loss minimization

As per this principle, it’s the insured duty & responsibility to take all actions to minimize the losses if it’s in their control. The insured person should take all necessary steps to control and reduce the losses if possible

Imagine there is a small fire in the car for example. If the car is insured, the insured person can’t just sit and relax thinking that the car is insured, he will get the claim for sure.

If it’s in his control, he can try to control the fire, call the fire department or take first level steps like throwing water etc. If they don’t do it, it’s the violation of this principle.

Principle #7 – Principle of Causa Proxima (Nearest Cause)

This is a very important principle of insurance which an insured person should be aware about.

As per this principle of causa proxima, when a loss if caused by more than one causes, then the nearest or the closest cause should be taken into consideration to decide the liability of the insurer.

The nearest cause should be insured by the insurer, only then the insurer liability comes into picture and policy holder will be paid. Insurer will not be liable for the farthest cause.

One of the common examples given for this is this

A cargo ship base was punctured by rats and because of that puncture, sea water entered the ship. If you look at the events, there are two reasons for damage of ship

• Rats punctured the base of ship (farthest)
• Sea Water entered the ship (closest)

Here as the insurance company will have to pay because the ship was insured against sea water entering the ship and that reason was closest.

Conclusion

Understanding these principles are a good way to understand how insurance works and how claim process works. Just because you have taken an insurance policy does not mean that it’s written in stone that your claim will be paid. You claim will be paid only when insurer liability arises in a given condition.

Since India offers higher interest income as compared to many other countries, many NRIs prefer India for fixed deposits or term deposits. However, they are afraid of foreign exchange risk as well as taxation norms.

So, if you are an NRI, looking for a safe investment option in India without obtaining approval of RBI, then FCNR (Foreign Currency Non-Residence) term deposit account could be one of the best option considering Forex and tax. In this article, I will be covering all the aspects of FCNR term deposit.

What is FCNR Term Deposit?

FCNR stands for Foreign Currency Non-Resident, it a type of fixed deposit for NRI of Indian nationality or PIO. An NRI can maintain a fixed deposit in foreign currency and earn regular interest on the same without prior approval of RBI with authorized dealer banks in India i.e. a bank authorized to deal in foreign exchange.

FCNR accounts allow deposit as well as withdrawal in foreign currency. Therefore, it avoids foreign exchange risk, which is involved in other option of investments in India.

These are the currencies, which are allowed to be deposited in FCNR account –

• US Dollar
• British Pound
• Euro
• Japanese Yen
• Australian Dollar
• Canadian Dollar

Along with these, RBI has allowed, authorized dealer banks to accept deposits in “Permitted currency” as well. Permitted currency means a foreign currency which is freely convertible and mainly includes, Danish Krone, Swiss Franc, and Swedish Krona.

Features of FCNR Term Deposit

• FCNR account has a maturity ranging from 1 year to 3 years.
• It can be opened jointly with 2 or more NRIs provided, all are persons of Indian nationality or origin
• With FCNR, you can easily repatriate the principal as well as interest to the country of residence/origin
• Nomination facility is available and any NRI, POI or Indian resident can be the nominee
• Recurring deposits are not accepted under this scheme
• On premature withdrawal/transfer to NRE account from FCNR, 1% penalty might be charged (varies from bank to bank)

Below is a video about FCNR account which will give you brief knowledge about it.

What can be the mode of investment?

For FCNR deposit, it is not mandatory to transfer funds from NRE/NRO account, as in the case of other investment options. One can transfer funds from overseas bank account directly to open FCNR account through cheque.

One can also use travelers cheque or foreign currency notes to deposit in FCNR account, on visit to India. Even one can also use an existing FCNR for creating new FCNR term deposit.

Documents required for opening FCNR Account

For opening this account, an application form duly attested by your banker/embassy of India/public notary must be submitted to the bank along with the following documents attached-

• Copy of passport
• Latest overseas bank statement
• Latest overseas address proof

If you are unable to visit India, then you can open this account by issuing power of attorney to a resident individual, who can fulfill all the requirements on your behalf.

Loan facility against FCNR

You can also avail loan against FCNR, provided that the proceeds of loan are not used for the purpose of re-lending i.e granting loan, carrying on agricultural/plantation activities or for investments in real estate sector. However, one can use the loan amount for other financial investment purposes like stocks or mutual funds, etc.

Loan can be availed in rupee or in any foreign currency.

Interest calculation and Taxation

The interest rate on FCNR  is compounded yearly and the rate of interest depends on the currency deposited and maturity term of FCNR account. For instance, the rate for a 1-year FCNR deposit in the US dollar would be in the range of 2.5-3% while the same for a deposit in the Australian dollar would be 5-6%.

Interest is calculated at an interval of  180 days each (i.e 6 monthly) and for remaining actual number of days in a year. However, the yearly interest amount is credited at the end of 360 days as per RBI guidelines.

What are the norms, if NRI status changes to resident Indian?

On change of status, it is your responsibility to inform the bank about it, so that the FCNR account will be designated as a resident account. FCNR will continue to earn interest. However, as the interest income is tax-free in the hands of NRI, now if you are qualifying as a resident or ordinarily resident, you will be taxed as per Indian slab rates, irrespective of the fact that you will be taxed in other country.

Conclusion

If you are afraid of bearing loss due to currency fluctuation then FCNR is a good option as compared to NRE/NRO saving deposits. It is specially designed to cover foreign exchange risk. However, it is very important to choose a good bank for FCNR, because if deposits are made at weak banks, it may be unable to pay back upon maturity.