Resident Foreign Currency (RFC) Accounts in India

Aman Saxena

You may have heard of NRE or NRO bank accounts, but what about accounts for those who are returning to India from abroad?

RFC accounts can be a solution if you are a recently returned NRI or are earning income overseas.

They are a unique bank account offered at many Indian banks that can help you keep your foreign earned income in the foreign currency. Read on to learn more about what a RFC account is, what the different types are and how to use it.

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📝 Table of contents

🏦 What is an RFC account?

RFC stands for Resident Foreign Currency Account.

Per the RBI, a foreign currency account is an Indian bank account that lets you hold money in a non-Indian Rupee currency.

A Resident Foreign Currency Account is open to residents of India who have earnings in a forign currency abroad and have not exchanged it into Indian Rupees. The account can be opened and held by the resident as an individual, or a qualifying joint owner.

If you are a Non Resident Indian looking to come back to India, an RFC account can be helpful to house your foreign earnings. Even if you are a resident Indian, a RFC account can help manage foreign earned income.

⚠️ To be considered a Resident of India, you must be living in India for more than 182 days within a financial year. ¹

An RFC will give you the freedom to hold foreign earned currency domestically and then convert and transfer to your Indian rupee account when you want.

But, depending on the bank, you are limited to only a handful of currencies in which you can open a RFC account in.

Here are some of the banks you can open an RFC account with:

  • HDFC
  • State Bank of India (SBI)
  • Yes Bank
  • Federal Bank
  • IndusInd Bank

You may need to have a current or savings account with the bank that you choose to open a RFC with.

RFC accounts come in 2 forms, a standard RFC and a RFC Domestic Account. Here is how they compare²:

Resident Foreign Currency Domestic AccountResident Foreign Currency Account
Held byIndividual or Joint, depending on the bankIndividual or Joint, depending on the bank
Type of AccountCurrentCurrent, Savings or Term deposits
InterestNo InterestDepends on the bank
Examples of how foreign currency can be receivedAs a a gift or payment from relatives or non-residentsPayments from employers abroad

One benefit of a RFC is that if you are a current Indian resident, but do go abroad and qualify as a NRI in the future, the account can be repatriated.

What is FCNR and RFC?

The Foreign Currency Non-Resident Account, or FCNR, is a term deposit account where you get an interest rate, and the term deposit comes to maturity.

This is different from an RFC, which is a functioning bank account where you can convert and draw money from.

FCNR term deposits can be held for a maximum of 5 years.³

What is an RFC fixed deposit?

An RFC fixed deposit works like a normal Indian fixed deposit account but is held domestically in a foreign currency by an Indian resident. There is an interest rate and can be repatriated if eligible or moved into a NRE/FCNR account.⁴

Who can open an RFC account in India?

To open an RFC account you must be a resident of India. NRIs who are living abroad for the majority of the year and have a foreign residence won’t qualify.

In most cases, you will also need to have an existing current or savings account with the bank that you open an RFC with.

Partnerships, minors or HUFs are not permitted to open an RFC account.

If you want to open an RFC account, be ready to provide and complete KYC documentation including proof of residency in India. ⁵

You will also have to ensure that the currency you are using to fund your account is one of the eligible currencies. Here is a sample of currencies for RFC accounts at major Indian banks.

BankRFC Account Currencies
IndusIndUSD, GBP, Euro
Yes BankUSD, GBP, Euro, AUD, JPY, CAD

The type of currencies available will also depend on the type of RFC account you choose.

RFC account interest rate

When you are looking for an RFC account, be sure to check the interest rate the bank is offering. The banks can be competitive in the interest rates they give, but as always the longer you hold the fixed deposit, the higher the rate.

Here is how HDFC bank gives interest rates for their RFC Fixed Deposit Account⁶:

1-2 years0.01%0.01%0.01%0.01%0.01%0.01%
2-3 years0.01%0.01%0.01%0.01%0.01%0.01%
3-4 years0.01%0.01%0.01%0.01%0.01%0.01%
4-5 years0.01%0.01%0.01%0.01%0.01%0.01%
5 years0.01%0.01%0.01%0.018%0.01%0.01%

Effective as of Feb 1, 2021

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  1. Qualifying as a Resident- RBI
  2. RFC- Domestic vs Currency Account
  3. FCNR vs RFC
  4. RFC Fixed Deposit
  5. Opening a RFC
  6. HDFC RFC Rates

All sources checked as of 26 February, 2021

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This publication is provided for general information purposes and does not constitute legal, tax or other professional advice from Wise Payments Limited or its subsidiaries and its affiliates, and it is not intended as a substitute for obtaining advice from a financial advisor or any other professional.

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