Person of Indian origins or non-resident Indians returning to settle permanently in India can open an RFC account.

After having worked abroad as an NRI (non-resident Indian), you would surely have some foreign investments such as your bank account balance, investments in shares, mutual funds, etc.You would surely like to bring back your foreign currency from your overseas back account. After your return to India, you can open an RFC (resident foreign currency) account which can be used to credit your income from foreign sources. 

Who can open?

                         Any NRI, who has returned to India on or after 18 April 1992, can open an RFC account. An RFC account can also be opened by an NRI who is employed abroad and his period of stay is at least one year prior to his return to India. Thus, PIOs (person of Indian origins) or NRIs returning to settle permanently in India can open an RFC account. An RFC account can be converted to FCNR(B) (Foreign Currency Non Resident (Bank) or NRE (non resident external) accounts in case the person becomes an NRI again.

Taxes paid

                           No loan/overdraft is granted by banks against balances in RFC accounts. Interest rates offered on RFC account varies by term and by currency. Interest credited is taxable. However, TDS (tax deducted at source) exemption can be claimed on interest earned basis declaration of RNOR (resident but not ordinarily resident) status, if eligible, at the start of the financial year.

Type of account

                            RFC accounts may be maintained in the form of current, savings (without cheque facility) or term deposit accounts and held singly or jointly only in the names of eligible persons. The term deposit accounts can be maintained for one to three years.

Foreign currencies

                           An RFC account is a bank account maintained in foreign currency. You can open an RFC account in any freely convertible foreign currency such as US dollars, pounds, yen, euros etc. These are foreign currencies that can be exchanged easily with other currencies and are recognized by the international market. Withdrawals in India are permitted in rupees only and are usually credited by the bank to the resident rupee bank savings account.

RFC to NRE

                         If you decide to go abroad again for a long term, you can either remit the RFC balance abroad or transfer funds from your RFC account into an NRE or FCNR (foreign currency non-repatriable) account.

Nomination

                         You can nominate either a resident or a non-resident for your RFC account. In case of death of the account-holder where the nominee is a resident, the balance in the RFC account will be paid to the nominee in Indian rupees. If the nominee is an NRI, such balance would be remitted abroad.

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