money matters for NRIs
RFC Account for Returning Indians

NRIs who return to India with their fortunes earned abroad can turn their NRE or NRO bank account to special Resident Foreign Currency (RFC) account. RFC account has features that can benefit returning Indians, especially those who might want to move out again or make foreign investments.

RFC account meant for whom

In a Resident Foreign Currency account you can maintain funds from abroad in foreign currencies like USD, GBP, JPY, Euro, CAD, AUD etc and withdraw them in Indian rupees. This is good for those who wish to put such funds to use abroad and not expose them to exchange rate movements. To open RFC account you should have been an NRI for at least 1 whole year. For calculating this 1 year period short personal visits to India, like on health grounds or visiting family, can be ignored.

Existing NRE or FCNR account can be re-designated as RFC account at your option instead of resident account, on your return to India. RCF account can be held in multiple currencies.

RFC account can be opened as savings account, current account or term deposit account of up to 5 years duration.

Money in Resident Foreign Currency account

Your foreign income earned as interest in a bank outside India, dividends, profits, rent or as sale proceeds from foreign assets can be credited in RFC account. Besides pension, gift money, foreign currency notes or traveler's cheques, balance in NRE/NRO account and interest earned on RFC balance can be credits or source of funds in this account.

Foreign remittance from RFC account is permitted for bona fide purposes and investments. Withdrawals in India are allowed only in Indian Rupees.

In case you become NRI again money lying RFC account can be freely transferred abroad or moved to NRE/FCNR account by furnishing a statement in the prescribed statement in form STAT 10.

Taxation in RFC account interest

Returning Indians can have Resident, Not Ordinarily Resident (RNOR) status for 3 years on returning to India. In RNOR status no tax is to be paid on income earned from assets abroad. Therefore by declaring status as RNOR you can earn exemption on interest earned on RFC account.

Interest, nomination

Rate of interest varies by term of deposit and currency. It is credited quarterly. Most banks pay interest on par with FCNR account on RFC account, and stands at 2.5-6%.

Nomination facility is available in Resident Foreign Currency account.

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