RFC account for NRIs: What is it, eligibility, how to open and more

RFC account for returning NRIs
For non-resident Indians (NRIs) planning to return to India, managing foreign earnings and assets efficiently is crucial. One effective way to do this is by opening a Resident Foreign Currency (RFC) account.

What is RFC account?
An RFC account allows returning NRIs to hold their foreign currency earnings in India, maintained in major currencies like the USD, GBP, and EUR. The primary benefit is avoiding currency conversion charges and managing funds seamlessly.

Who can open RFC account?
Typically, returning NRIs who have lived abroad continuously for at least one year are eligible to open an RFC account.

Procedure to open RFC account
The first step is to select a bank in India that offers RFC accounts. Compare features, interest rates and services offered by different banks before making a decision. You can obtain the RFC account opening form from the bank or online, fill it out, and submit it along with required documents such as:

• KYC documents: Proof of identity, address, PAN card, passport and photographs.
• Proof of NRI status: Visa, work permit or employment certificate.
• Proof of returning to India: Passport entry stamp, tickets.
• After verifying these documents, the bank will open the RFC account and provide details to the customer.

Fund transfer
After the account is opened, the customer can transfer foreign earnings into it by using wire transfer, foreign currency cheques, or by moving from existing NRE/NRO accounts.

Points to note
1) Funds in an RFC account are fully repatriable and can be transferred back to an overseas account, if needed.
2) Interest earned on RFC accounts is typically tax-exempt until the account holder attains resident status for tax purposes.

Content courtesy Centre for Investment Education and Learning (CIEL).
Contributions by Girija Gadre, Arti Bhargava and Labdhi Mehta.