Check out the Top Benefits of Parking your Foreign Currency Earnings in an RFC Account

When it comes to banking options, today NRIs have plenty of choices. From NRE and NRO accounts to RFC accounts, there are several banking accounts just for NRIs. Each of these accounts serve different purposes.

Here, in this post, we highlight the reasons why you should consider opening an RFC bank account in India if you’re a returning NRI.

What’s an RFC Bank Account?

In an initiative by the RBI (Reserve Bank of India) to liberalise foreign exchange facilities for individuals, returning NRIs were given the ability to hold and maintain a bank account in foreign currencies. Simply put, the Resident Foreign Currency (RFC) account lets NRIs park their funds in foreign currencies in India.

Here are the Top 5 Salient Highlights of an RFC Bank Account

1. Returning NRIs (Non-resident Indians) or PIOs (Person of Indian Origin) can open an RFC bank account at any RBI-authorised bank or NBFC. The account can either be a savings account, current account or fixed-term deposit.
2. To open the RFC account, the account holder must be a citizen of India or a PIO and should have lived outside India for at least more than a year.
3. The returning NRI can also transfer funds from other accounts like their NRE, NRO or FCNR account to the RFC bank account.
4. Other dividends, profits, rental proceeds, interests gained from the sale of any foreign assets the NRI held during his/her time abroad can also be credited to the RFC bank account.
5. The funds held in the RFC bank account are free from foreign currency utilisation restrictions. Meaning, it can be used for investments outside the country.

Benefits of Opening an RFC Account in India

●        Keep your Foreign Currency Earnings as it Is: It lets you park your foreign currency earnings in foreign currency. This way, you can protect your hard-earned money from foreign currency exchange fluctuations. For instance, if you have a sum in US dollars, you can hold it in USD itself in your RFC bank account, without having to exchange it to Indian rupees.

●        Fully Repatriable: Let’s assume that you come back to India for a few years at the end of your visa. You then stay in the country and park your foreign currency earnings in an RFC bank account. Say, you get a visa once again, and your status changes from a resident Indian to an NRI.

The amount you have parked in the account, including the interest earned, is fully repatriable. You can transfer it to your bank account in the country of your residence.

●        Easy Cash Withdrawal: Though the funds in this account are held in foreign currency (USD or GBP), you can withdraw cash from it in Indian Rupees. To do so, you have to produce a written request. The balance is first converted into INR and then paid in cash to you.

●        Flexibility: You can open an RFC bank account using any foreign currency. However, remember that the balance in your account is maintained either in USD or GBP, based on your preference.

Joint Holding: You can hold the account jointly with another family member like your spouse, children, etc. However, remember that the other person must also be a returning NRI.

●        Easy Change of Status: If you change your resident status back to an NRI, the funds held in your RFC account can be easily transferred to your other accounts like an NRE, NRO or FCNR account.

 

To Conclude

The RFC bank account is the best way to park your foreign currency earnings in India for the time being, especially, if you think your resident status would switch to an NRI sometime in the future. Alternatively, you can use it to avoid foreign currency exchange fluctuations and keep your earnings in a stronger currency in India.