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An important step towards liberalisation of foreign exchange facilities available to individual residents was, the permission by Reserve Bank of India to allow a resident in India to open, hold and maintain with a licensed Bank (which is also an authorised dealer) in India, a Foreign Currency (Domestic) Account and foreign exchange acquired from any of the sources specified as under can be kept in this account by the resident.

Features & Benefits

  • While on visit to any place outside India by way of payment for services not arising from any business in or anything done in India; or
  • From any person not resident in India and who is on a visit to India, as honorarium or gift payment for services rendered or in settlement of any lawful obligations; or
  • By way of honorarium or gift while on a visit to any place outside India; or
  • From an authorised person for travel abroad and represents unspent amount: or
  • Gift received from close relative; or
  • Foreign exchange earned through export of goods and/or services; or royalty, honorarium etc.
  • No charges on non-maintenance of minimum Average Quarterly Balance

Type of Account: Current Account.

Currency: Foreign Currency such as USD, GBP & EURO.

Eligible Credits: Out of Foreign Exchange acquired from the sources specified as above in the form of currency notes, bank notes and travellers cheques.

Eligible Debit: Payment towards current and capital account transactions in accordance with existing foreign exchange regularities.

Ceiling: No upper ceiling on balances held in account is stipulated by Reserve Bank of India.

Interest: No interest will be payable on balances held in account.


Any person resident in India can open or hold an RFC account out of Foreign Exchange received:

  • As pension or any other super annuation or other monetary benefits from his employer outside India
  • Realised on conversion of assets outside India and repatriated to India
  • Received as a gift or inheritance from outside India


Who is eligible to open an RFC account?
  • A person resident in India can open or hold an RFC account out of Foreign Exchange received
  • As pension or any other superannuation or other monetary benefits from his employer outside India; OR
  • Proceeds of assets being foreign currency, foreign security or any immovable property situated outside India if such currency, security or property was acquired, held or owned by such person when he was resident outside India; OR
  • Received as a gift or inheritance from a person who was resident outside India
  • In this regard, foreign security is defined as any security, in the form of shares, bonds, debentures or any other instrument denominated or expressed in foreign currency and includes securities expressed in foreign currency, but where redemption or any form of return such as interest or dividends is payable in Indian currency.
What funds can be credited to RFC accounts of Returning Indians?

The entire amount of foreign exchange brought to India at the time of their return to India for permanent settlement as well as the balances standing to the credit of their NRE and FCNR accounts at the time of return can be credited to RFC accounts. However, if the aggregate value of the foreign exchange in the form of currency notes, bank notes or travellers cheques brought in exceeds USD 10,000/- or its equivalent and/or the value of foreign currency exceeds USD 5,000/- or its equivalent, it should be declared to the Customs Authorities at the Airport in the Currency Declaration Form (CDF), on arrival in India.

Are the balances in NRE/FCNR account permitted to be credited to RFC account?

RFC deposit accounts can be opened by transfer of balances in FCNR deposits with banks in India. This also includes the maturity proceeds of the Resurgent India Bonds (RIBs). The account cannot be opened with funds from an NRE Rupee Account. However, once the RFC account is opened with eligible funds as above, the balances in the NRE Rupee Account of the depositor can be transferred into the RFC account.

Is the interest earned on RFC account liable to tax?

The treatment of deducting tax at source on interest earned on RFC Deposit Account is similar to Domestic Term Deposits. The tax on interest income from RFC is exempted till such time as the Returning Indians maintain the status of ' Non Resident ' or 'Resident but Non Ordinary Resident'. A returning NRI covered by the definition of resident in current year will be considered 'resident but not ordinarily resident ' if he is a non-resident for 9 out of 10 immediately preceding financial years or if he been in India for not more than 729 days during the preceding seven financial years.

Who can be a joint holder for RFC account?

The account can be held jointly with another person resident in India who is eligible to open an RFC account.

What is the interest rate and tenures for RFC deposits?

The interest rates offered for RFC Deposits is at par with FCNR deposits and the tenure ranging from minimum of 1 year to maximum of 3 years. Premature withdrawal will attract 1% penalty plus swap cost if applicable will be deducted.

Can funds in the RFC account be repatriated abroad?

Yes. Funds in RFC accounts can be remitted abroad for any bonafide purpose of the account holder or his dependents including exchange required for travel and other personal purposes and investments.

Can RFC account be opened any time after returning to India?

Yes, there is no restriction as long a resident in India meets the condition of eligibility as stated above. Further, for returning NRIs, the eligibility to open this account is not linked in any way with their RNOR status under the Income Tax Act.

In which currencies can the RFC accounts be opened?

RFC term deposit accounts can be opened in following currencies: USD, GBP and EUR

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  • Daily balance Upto Rs. 1 Lakh 4 %
  • Daily balance above Rs. 1 Lakh & upto (& including) Rs. 10 Lakhs 5 %
  • Daily balance above Rs.10 Lakhs 6 %

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  • NRE - 2 years 6 months to below 2 years 9 months 7.5 %

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