Why Financial Planning?

Planning is bringing the future into the present so that you can do something about it NOW.

Resident Foreign Currency account – they are bank accounts that can be maintained by resident Indians in foreign currency.

RFC accounts are helpful for NRIs as NRIs might have money in foreign currency in bank accounts abroad that they would like to bring to India.

RFC Account

Check – NRE FD after Return to India

Resident Foreign Currency Account – RFC Account

  • An RFC Saving account in India can be opened when an individual returns to India after residing abroad for a year or more.
  • Resident Foreign Currency accounts can be opened in any of the banks in India such as ICICI Bank, Yes Bank, Axis Bank, SBI, etc.
  • An RFC Bank accounts can be a current account, a Resident Foreign Currency savings account, or a fixed deposit account.
  • The amount deposited in the account should be in any freely convertible foreign currency i.e. foreign currencies that can be exchanged easily with other currencies such as US Dollar, GB Pound, Japanese Yen, Euro, etc. The foreign currency accepted depends on the banks. For example, ICICI bank allows opening accounts in GB Pound and US Dollars. SBI allows the opening of RFC saving accounts in USD, Euro, and GB Pound.
  • The account can be opened under a single name or jointly with eligible returning NRI or a resident relative. A resident relative includes the following – spouse, mother, father, step-parents, son, daughter, stepchildren, daughter-in-law, son-in-law, brother, sister, step-brother, and step-sister. But resident relatives cannot operate the account.
  • Amount deposited can include
    • Foreign exchange earnings via profession, business, or employment abroad and money present in overseas bank accounts
    • Pension received abroad.
    • Interest and Dividend earned abroad
    • Gifts received in monetary form or
    • Funds from the sale of assets.
    • Money can be transferred from an NRE account to an RFC accounts too.
  • Funds from the RFC Saving account can be transferred abroad for bonafide purposes. It can also be transferred to NRE/FCNR accounts in case the individual becomes an NRI again. Cash can be withdrawn in India as well. You will get the amount after conversion to Indian Rupees based on the prevailing exchange rate.
  • A nomination facility is also available.

“Funds from the RFC account can be transferred abroad for bonafide purposes. It can also be transferred to NRE/FCNR accounts in case the individual becomes an NRI again.” wiseNRI

Must read – NRE Accounts Vs NRO Accounts – Everything You Must Know

RFC Saving Account Interest Rate

Interest is credited quarterly. Interest rates are decided by the banks based on tenure and currency.

Foreign currency nonresident account (Savings) interest is negligible – around .01%

Resident Foreign Currency account
RFC Saving account

RFC Fixed Deposit Rates

Period GBP USD EURO JPY
< 29 Days 0.01% 0.01% 0.01% 0.01%
30 days – 3 Months 0.01% 0.01% 0.01% 0.01%
3 Months 1 day – 6 Months 0.01% 0.01% 0.01% 0.01%
6 Months 1 day – < 1 Year 0.01% 0.01% 0.01% 0.01%
1 year – < 2 years 0.01%  0.01% 0.01% 0.01%
2 years – < 3 years 0.01%  0.01% 0.01% 0.01%
3 years only 0.01% 0.01% 0.01% 0.01%

Source: HDFC Bank

Read – What is RNOR?

RFC Domestic Account

There is some difference between the RFC Saving account and the RFC (D) accounts.

An RFC (D) account is a Resident Foreign Currency (Domestic) account. The differences are that the RFC (D) account can only be a current account and it does not earn any interest. Funds from NRE accounts cannot be transferred to an RFC account(D).

The account can be opened by completing the application form along with a self-attested passport copy, copy of work visa or work permit that the NRI had while being abroad, and Indian address proof.

RFC account is useful for a returning NRI. The amount can be used in India as well as used for remitting money abroad in case there are any transactions to be done. If the amount is to be received and the foreign bank accounts are closed, money can be remitted to this account. It helps to complete unfinished financial matters smoothly.

This post is written by Vidya – she is an NRI.

If you have any questions regarding the Resident Foreign Currency account or you would like to share your experience – use the comment section.

FAQs

Q1. What is a resident foreign currency account?

Ans. Resident Foreign Currency accounts – They’re bank accounts that can be maintained by resident Indians in foreign currency. These accounts are helpful for NRIs as they might want to bring money from abroad to India.

Q2.What are the benefits of opening an RFC account?

Ans. RFC Account helps you with the saving of foreign currency and provides tax exemption on the interest that accrues when you declare the status of a Resident-Not-Ordinarily-Resident. You can also repatriate funds via RFC Account for a bonafide purpose

Q3. What is an RFC Fixed Deposit?

Ans. RFC Fixed Deposit is a great opportunity for the Non-resident Indian who had returned to India to earn high returns on the funds which he holds in foreign currency. It is a type of deposit that can be held for a maximum of 3 years.

RFC Account
Published on December 24, 2021

Hemant Beniwal


Hemant Beniwal is a CERTIFIED FINANCIAL PLANNER and his Company Ark Primary Advisors Pvt Ltd is registered as an Investment Adviser with SEBI. Hemant is also a member of the Financial Planning Association, U.S.A and registered as a life planner with Kinder Institute of Life Planning, U.S.A. He started his Financial Planning Practice in 2009 & is among the first generation of financial planners in India. He also authored Bestseller book "Financial Life Planning". 

  • Can an NRI son gift his father in foreign currency outside India to purchase a house property outside India? What are the FEMA implications?

  • How can I transfer money from a account in India owned by a resident of India to a NRI living in the UK with minimum tax? I have looked at gifts, NRE,NRO, RFC, please help… The NRI has a NRE and NRO account. The sum being transferred is 50,000 pounds equivalent.

    • Hi Kani

      If the NRI is your relative then you can transfer it with a gift deed. If not a relative then you have to pay taxes

  • I have NRE savings account jointly held with my wife. My status has been changed from NRI to resident Indian but my wife is still an NRI. I am primary holder of the account. Can i change this account to RFC account and how.

  • I returned India on 4th October after 33yrs staying in Saudi Arabia ..I need investment and tax consultation with you pls advise how will I proceed

  • Thanks for your nice article..How long a returning NRI can maintain the RFC accounts? Is it life long or for some limited years?

      • Thanks Sanjoy…But I am not sure about your reply..As far as I know, during RNOR status of maximum 3 yrs, RFC account interest is tax free and afterwards it is treated as a Domestic RFC account , thus interest becomes taxable in India and can be maintained for a indefinite time…Please check and confirm/revert…
        Waiting for your feedback…A. Dutta

  • A NRI for 25 years returning to India having USD FCNRs and NRE Rs deposits.
    1. What should be done with NRE InRs deposits ? Can they be retained till maturity? Is the interest taxable or taxfree?
    2. What should be done with USD FCNRs? Can they be retained till maturity? Is interest taxfree?
    3 For InRs NRE account – is it to be converted to RFC account?
    Thanks NM

  • {"email":"Email address invalid","url":"Website address invalid","required":"Required field missing"}

    Related Posts

    Liberalised Remittance Scheme For NRI? 5 Facts About LRS Scheme
    Mr. NRI – Time Is Money When it Comes to Retirement Planning !
    A Comprehensive Guide for Investing in Mutual Funds for NRI In India

    Subscribe now to get the latest NRI updates!

    >
    Share via
    Copy link