A Non Resident Indian who returns to homeland (India), is allowed to open, hold and maintain account in foreign currency with Authorised Dealer banks in India. The account is called ‘RESIDENT FOREIGN CURRENCY (RFC) ACCOUNT’.
RFC account may be opened by an individual in the form of savings, current or term deposit account. Account can be opened singly or jointly.
Foreign exchange from following sources will be credited to RFC Account:
- Pension or any other superannuation or other monetary benefits from his employer outside India;
- Realisation proceeds of foreign assets currency notes, deposits, including foreign security or immovable property situated outside India acquired, held or owned by such person when he was a person resident outside India;
- Realisation proceeds of assets acquired as gift or inheritance from a person outside India;
- Proceeds of Insurance Policy claims, maturity /surrender values settled in foreign currency from an insurance company in India permitted to undertake life insurance business by Insurance Regulatory and Development Authority.
- Balances held in NRE Savings, Current Account is eligible for conversion into foreign exchange and crediting to RFC account.
- NRE term deposit and FCNR(B) deposit held in the name of account holder can be credited to RFC account. No penal interest is charged for pre-mature closure of NRE/FCNR(B) deposit for crediting the funds to RFC account of the account holder.
Utilisation of funds lying in RFC Account
- The funds in a RFC account are free from all restrictions regarding utilisation of foreign currency balances including any restriction on investment in any form, by whatever name called, outside India.
- Remittance of foreign exchange from RFC account for the transactions totally prohibited by Government of India would not be allowed.
- Funds can be utilized for all local payments by converting foreign exchange into Rupee.
RFC account holder may nominate a resident or non-resident person as nominee.
In case of nominee being non-resident, funds to the extent of nominee’s share or entitlement from the deceased account is freely repatriable without approval of Reserve Bank of India.
A resident nominee, desirous of sending funds outside India to meet the liabilities of deceased account holder is allowed to do so after getting approval from Reserve Bank of India.
STATUS OF RFC A/c WHEN ACCOUNT HOLDER TURNS NRI AGAIN
On RFC account holder’s becoming NRI again, he/she is entitle to transfer his RFC funds to Non-Resident External Account or convert it into FCNR (B) deposit.