RFC Deposit: Choice for Returning NRIs

Resident Foreign Currency (RFC) Account can be in the form of savings account, current accounts and term deposits. Mentioned in this post are some of the key highlights of RFC deposits.

RFC orResident Foreign Currency accountcan be maintained in foreign currency by resident Indians. There are many types of RFC account, such as current account, saving account, or term deposit account.

Non-resident Indians (NRI’s) returning to India can transfer their funds to an RFC deposit when they return to the country. They can then easily transfer these funds to an NRE account if they again shift overseas and acquire NRI status.

Here are key highlights and important details regarding an RFC deposit:

  • Eligibility for Opening RFC Deposit: You must be of Indian nationality or Indian origin and have stayed outside India for at least a year to open an RFC term deposit account.
  • Documents Required to Open the Account: Opening an RFC term deposit account is rather a hassle-free process and does not require special documents that need to be procured. Generally, photocopies of the following documents are required as proof of your eligibility success:
  • Current passport, along with pages containing personal details
  • Valid resident visa or expired work permit and immigration stamps, reflecting your NRI status
  • Passport size photographs

These documents, along with the RFC fixed deposit form, need to be submitted to the concerned bank. Remember, that the photocopies submitted along with KYC forms and others should be self-attested.

  • Provision of Multi-currency Support: Usually, the banks offer multiple conversions, out of which you can select one. The account is generally available in popular currencies like US Dollars (USD), Japanese Yen (JPY), EURO, and Pound Sterling (GBP). A salient feature of the RFC account is protection from foreign exchange risk while earning you interest on the saving balance and deposits.
  • Permitted Forms of Deposits: Deposits are allowed as per permitted foreign currency that can vary from one bank to another. You can deposit your overseas earnings, any foreign currency notes, and cheques into your RFC deposit Similarly, any monetary benefits, profits, foreign earnings from sales abroad, and income from likewise sources, including interest on the RFC account, can be deposited.

You might need to submit a Currency Declaration Form (CDF) to the customs authorities depending on the value of currency or traveller’s cheque you bring with yourself on your return to India.

  • Withdrawals,Interests, and Tenure: The tenure of the deposits can range between 1 month to 3 years. While premature closure of the deposits is allowed, such withdrawals are subject to a small penalty. The interest rates on the deposits would depend on the currency, the term and the amount of deposit. While RFC deposits are freely repatriable and can be used to make payments and investments abroad, cash withdrawals are only allowed in Indian rupees. In case of withdrawals in INR, the currency is converted based on the prevailing exchange rates.
  • Joint Holding and Nomination: RFC fixed account can be held with jointly with resident Indians who are eligible to open RFC accounts. While these accounts cannot be jointly held with resident Indians who’ve never been NRIs, both NRIs and Indian residents can be nominated to be the rightful owners in case of demise of the original account holder. However, in case of resident Indians being nominated, remittance of any funds received outside India has to be approved by the Reserve Bank of India (RBI).

RFC Deposits: The Right Way to Invest Your Foreign Earnings in India

RFC deposit accounts help you safeguard your foreign earnings against exchange risk while earning high interest on the same. Moreover, you can use the funds for your expenses abroad or even for use in India on your return.

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