Resident Foreign Currency Accounts are a must when dealing with foreign currency in India. International students and professionals can easily manage their foreign currency in a structured manner. These accounts are regulated by FEMA (Foreign Exchange Management Act). You can simply approach an Authorised Dealer Bank to open the Foreign Currency Account. Leading Indian banks like SBI, ICICI, HDFC, and others provide these services. Let’s explore the details in this blog.
Table of contents
- What are Resident Foreign Currency Accounts (RFC Accounts)?
- Types of Resident Foreign Currency Accounts
- Benefits of Resident Foreign Currency Accounts
- How to Open a Resident Foreign Currency Account
- Documents Required for Resident Foreign Currency Accounts
- Top Indian Banks and Authorized Dealers Offering RFC Accounts
- Difference Between Resident Foreign Currency Accounts (RFCA) and Foreign Currency Non-Resident Accounts (FCNR)
- FAQs
What are Resident Foreign Currency Accounts (RFC Accounts)?
A Resident Foreign Currency (RFC) Account is a type of account that can be opened by Indian residents to hold and manage foreign currency, including remittances in foreign currency. The account facilitates easy management of foreign exchange in India and enables payments in foreign currency.
- The RFC Account can be opened in different forms, including current, savings, or term deposits, depending on the specific needs of the account holder.
- They can be opened in various currencies, including USD, EUR, JPY and GBP currencies, based on the type.
Who Can Open an RFC Account?
As per FEMA (Foreign Exchange Management Act) guidelines, the RFC Account can be held both individually and jointly. Joint accounts can be opened with eligible relatives, as defined under the Companies Act, 2013, which includes family members such as spouses, parents, children, and siblings.
The following individuals are eligible to open an RFC Account in India:
- Indian residents who have foreign currency earnings.
- Those who have received foreign currency through inheritance or gift from abroad.
- Individuals transitioning from non-resident to resident status.
- International students planning to study abroad.
Types of Resident Foreign Currency Accounts
There are two main types of Resident Foreign Currency (RFC) accounts that individuals can open to manage their foreign exchange earnings in India. These accounts allow residents to hold and manage foreign currencies in India, but each account type has its own eligibility criteria, account structure, and interest policies.
| Account Type | Eligible For | Account Type | Interest |
| Resident Foreign Currency (Domestic) [RFC(D)] Account | Individuals with foreign exchange receipts such as gifts, royalty earnings, or payments for export services. | Current Account only | No interest |
| Resident Foreign Currency (RFC) Account | Individuals with foreign exchange earnings, superannuation benefits, or inheritances. | Current, Savings, or Term Deposit Account | Interest is de-regulated and depends on the bank’s policies. |
Benefits of Resident Foreign Currency Accounts
Resident Foreign Currency (RFC) accounts offer a flexible and efficient way to manage foreign currency earnings in India. These accounts provide several advantages for those receiving foreign exchange, such as students, expatriates, or professionals with international income. Check out the benefits below-
Flexibility in Foreign Currency Transactions
RFC accounts offer greater flexibility in handling foreign currencies, making them ideal for people with foreign earnings. International students can easily deposit and withdraw foreign currency, facilitating smooth management of tuition fees, living expenses, and other costs associated with studying abroad.
No Restrictions on Repatriation
One of the key advantages of RFC accounts is the lack of restrictions on repatriating funds. This means students can use their foreign currency both within India and abroad, without facing the usual limits that apply to other foreign exchange accounts. It provides more freedom for students to transfer money as needed for tuition, accommodation, or personal expenses.
Managing Foreign Exchange Earnings
For international students receiving funds from family members or scholarships in foreign currency, RFC accounts serve as an efficient tool to manage these funds. Whether it’s from gifts, foreign earnings, or scholarships, the RFC account ensures that students can handle their money conveniently in the currency of their choice.
Alternatively, other international and domestic bank accounts for students like Wells Fargo Student Checking Account and BRO Savings Account by Bank of Baroda help them manage their finances efficiently.
Interest on Deposits
Although interest is de-regulated, RFC accounts allow holders to earn interest based on the bank’s policies, with potentially higher rates for term deposits. International students can take advantage of this by keeping funds in a term deposit account, earning returns while studying abroad.
For Indian students studying abroad, RFC accounts are particularly beneficial. Under FEMA guidelines:
- A student who goes abroad for studies can open a foreign currency account outside India. The account can hold funds for tuition fees, accommodation, and living expenses.
- Once the student returns to India, the account will be converted to a Liberalised Remittance Scheme (LRS) account, subject to the prescribed limits under FEMA.
Also Read: Check here what are NOSTRO and VOSTRO Accounts. Know the importance, benefits, and how it is useful for international students.
How to Open a Resident Foreign Currency Account
To open an RFC account, an individual needs to approach an Authorized Dealer (AD) Bank, such as a bank with foreign exchange authorization. The process typically involves:
- Filling out an application form.
- Submitting relevant documents, including proof of residence and foreign currency earnings (if applicable).
- Meeting any additional requirements set by the authorized dealer.
Once the account is opened, the individual can manage their foreign currency earnings, receive payments, and even make payments or investments in foreign currency.
Documents Required for Resident Foreign Currency Accounts
To open a Resident Foreign Currency (RFC) account, applicants must provide specific documentation. These documents help verify the applicant’s eligibility as a returning Indian resident and facilitate the account opening process. Below are the key documents required:
- Passport Copies: Photocopies of all pages of the applicant’s passport, including personal and visa information, to verify identity and residency status.
- Visa Documentation: A copy of the valid visa and immigration stamps that prove a minimum one-year stay abroad.
- RFC Declaration Form: A completed and signed RFC declaration form, that affirms the applicant’s eligibility and intent for opening the account.
- Proof of Foreign Earnings: Documentation showing evidence of foreign income, such as payslips, bank statements, or inheritance documents.
- Application Form: A filled application form specific to opening an RFC account.
- Additional Identification: Valid identification documents like a national ID may also be required by some banks.
Several Indian banks and Authorized Dealers (ADs) offer Resident Foreign Currency Accounts (RFC Accounts) to residents in India. These accounts can hold major foreign currencies like USD, GBP, EUR, and others. You can simply visit the bank’s branch or online platform and submit the required documents.
| Bank Name | Account Type | Features |
| State Bank of India (SBI) | Resident Foreign Currency (RFC) Account | 1. Available for individuals receiving foreign currency or transitioning to resident status. 2. Offers both RFC(D) and other RFC-related services. |
| ICICI Bank | RFC Current & RFC Savings Account | 1. Allows foreign earnings, export proceeds, and foreign currency income. 2. Provides both current and savings account options. |
| HDFC Bank | Resident Foreign Currency Account | 1. Flexible options for managing foreign income, pensions, and remittances. 2. Offers easy management of foreign exchange funds. |
| Axis Bank | RFC Account | 1. Allows credits from various sources like inheritance, gifts, and export earnings. 2. Provides a range of foreign currency accounts, including EEFC. |
| Kotak Mahindra Bank | RFC Current & Savings Account | 1. Allows depositing foreign currency earnings and repatriation to India. 2. Competitive services for managing foreign funds. |
| Bank of Baroda | RFC Current & RFC Term Deposit Account | 1. Focus on foreign currency earnings or remittances. 2. Offers RFC Current Accounts and RFC Term Deposits. |
| Standard Chartered Bank | RFC Account | 1. Services tailored for managing pension, savings, or professional earnings abroad. 2. Wide range of RFC account options for foreign currency holdings. |
| IDFC First Bank | Resident Foreign Currency Account | 1. Efficient management of foreign currency earnings with savings and term deposit options. 2. Ideal for both personal and professional foreign funds. |
| Yes Bank | RFC Account | 1. Flexible RFC accounts for personal or professional foreign currency needs. 2. Offers savings accounts and fixed deposit options. |
| Punjab National Bank (PNB) | RFC Account | 1. Allows individuals to hold foreign currencies. 2. Interest-earning options for foreign currency holdings. |
| Union Bank of India | RFC Account | 1. Provides foreign currency management solutions including deposit accounts. 2. Flexible options for repatriating funds to India. |
Also Read: Check here for the details of some of the best banks for inward remittance. Know all about the charges on remittance.
Difference Between Resident Foreign Currency Accounts (RFCA) and Foreign Currency Non-Resident Accounts (FCNR)
When considering financial options for managing foreign currency, individuals may encounter both Resident Foreign Currency Accounts (RFCA) and Foreign Currency Non-Resident Accounts (FCNR).
While both account types allow for the holding of foreign currency, they cater to different needs and have distinct features. The RFCA is suitable for Indian residents needing flexibility in account types and FCNR accounts serve NRIs looking for fixed-term deposits in foreign currencies.
Check out the table for comparison-
| Feature | Resident Foreign Currency Account (RFCA) | Foreign Currency Non-Resident Account (FCNR) |
| Eligibility | Available to Indian residents | Available to Non-Resident Indians (NRIs) |
| Account Type | Can be savings or current accounts | Fixed deposit account only |
| Tenure | No fixed tenure required | Fixed tenure ranging from 1 to 5 years |
| Interest Rates | Generally lower, varies by bank | Typically higher, fixed for the tenure |
| Taxation | Interest earned is taxable in India | Interest earned is tax-free in India |
| Withdrawal Flexibility | Flexible withdrawals in foreign currency | Withdrawals in the same foreign currency only |
| Joint Account | Allowed with residents and NRIs | Allowed only with NRIs |
FAQs
An RFC (Resident Foreign Currency) Account allows Indian residents to hold and manage foreign currencies they receive as income, savings, or remittances.
Yes, students who have foreign currency earnings, like from abroad studies or gifts, can open an RFC account to manage their funds.
RFC accounts are available in current, savings, and term deposit forms, depending on the bank and the account holder’s needs.
Indian residents who receive foreign currency earnings, including students, expatriates, and individuals with foreign income, can open an RFC account.
RFC accounts help students manage funds received in foreign currencies, such as from international scholarships or family remittances, and provide flexibility in repatriating money to India.
No, there are no restrictions on repatriating funds from an RFC account, making it ideal for students studying abroad or those with foreign income.
Yes, RFC accounts are specifically designed to receive foreign currency deposits, such as scholarships, remittances, or earnings from abroad.
Interest on RFC accounts is de-regulated and varies by bank. You may earn interest, especially on term deposits.
If you return to India after studying abroad, your RFC account remains valid, and you can continue using it for managing foreign currency funds.
Many banks in India, like SBI, ICICI, HDFC, Axis, and Kotak Mahindra, offer RFC accounts. You need to check the eligibility and requirements of the bank.
To learn more about education loans, the best bank accounts for students, forex, banking experience for global students, or international money transfers, reach out to our experts at 1800572126 to help ease your experience with studying abroad.
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