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Opening, Holding And Maintaining A Resident Foreign Currency (RFC) Account

[RFC account of a Returning NRI and Investment Abroad]

A person resident in India as per Regulation No. 5 of Foreign Exchange Management (Foreign Currency Accounts by a Person Resident in India) Regulations, 2000, may open, hold, and maintain with an authorised dealer in India, a Foreign Currency Account, to be known as a Resident Foreign Currency (RFC) Account, out of foreign exchange—

  1. received as pension or any other superannuation or other monetary benefits from his employer outside India; or

  2. realised on conversion of the assets referred to in Section 6(4) of FEMA, and repatriated to India; or

  3. received or acquired as gift or inheritance from person resident outside India as referred in Section 6(4) of FEMA; or

  4. acquired as gift or inheritance from a person referred to in Section 9(c) of FEMA.

  5. received as proceeds of life insurance policy claims, etc. in foreign currency (w.e.f. 1-1-2004).

The funds in a RFC Account opened or held or maintained would be free from all restrictions regarding utilisation of foreign currency balances including any restriction on investment in any form, by whatever name, called, outside India. In some cases, a foreign currency account is also allowed to be maintained outside India by LIC or a shipping or airline company, etc.
RFC Scheme came into force with effect from 7.9.1992. Citizens of India or persons of Indian origin who having been residents outside for a continuous period of less than one year and who become persons residents in India or on or after 18th April, 1992 are eligible for opening RFC accounts. Persons holding RIFEE permits or reconversion facility opting to open the RFC account are also eligible. The eligible assets which can be credited to the RFC account are foreign exchange assets acquired or held otherwise than in contravention of the FERA and FEMA by an eligible person, while he was the resident outside India (Non-resident) in the form of deposits in banks outside India, investments in foreign currency shares or securities or immovable properties situated outside India or investments in business, etc. outside India and include foreign exchange earnings through employment, through business or vocation, outside India taken up or commenced by such person while he was resident outside India. Any eligible person can open the RFC account with an authorised dealer. The application for this purpose has to be made in Form RFC and must be accompanied with the following documents:

  1. An attested copy of relevant pages of passport, giving the passport particulars, date of arrival in India and particulars of residence outside India;

  2. Documentary evidence to show the funds proposed to be credited to the account are eligible for the purpose, The RFC account can be opened in any permitted foreign currency.

All types of accounts, namely, current, saving, and fixed deposits, in joint accounts can be opened under this scheme. The rate of interest on the deposits under the scheme is left to the discretion of the authorised dealer. Normally, no loan or overdraft would be allowed either directly or indirectly against balances in RFC account.

RFC account of a Returning NRI and Investment Abroad
1. Introduction - RFC Account Of A Returning NRI And Investment Abroad
2. Opening, Holding And Maintaining A Resident Foreign Currency (RFC) Account
3. Tax Haven For Returning Indians Via RFC Account
4. Exchange Earner’s Foreign Currency (EEFC) Account
5. Direct Investment Outside India By A Returning NRI Or A Resident In India

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