Effective 17th July 1992, the Government of India has granted the following exemption to persons who return to India after a continuous stay abroad for 1 year and above.

  • Foreign currency assets such as shares, securities or investments in business, etc. and immovable properties can be retained abroad.
  • Foreign currency accounts with banks abroad can also be retained.
  • No RBI permission required to hold these assets.
  • Complete freedom to utilise these assets as well as income earned on them or the sale proceeds thereof received subsequently.
  • Freedom to repatriate these assets as well as income earned on them or the sale proceeds thereof received subsequently.
The funds / assets mentioned above should have been acquired by the retuning Indians out of Foreign Exchange earned through employment, business or vocation outside India, set up or commenced while they were Resident outside India and NOT in contravention of Foreign Exchange Regulation Act 1973.


RESIDENT FOREIGN CURRENCY (RFC) ACCOUNT SCHEME:

  • The Resident Foreign Currency scheme (RFC) is an RBI approved scheme wherein persons of Indian Origin or nationality (who have returned to India on or after 18th April 1992 for permanent settlement) are permitted to open Foreign Currency accounts with banks in India for holding funds brought by them in India.

  • The minimum period of stay outside India should be a continuous period of not less than 1 year to be eligible to open account/s under this scheme.

  • Persons who have returned to India before 18th April 1992 can also open RFC account/s, PROVIDED:
      * They are holding Foreign Currency assets abroad with RBI permission or
      * They are in receipt of pension or other monetary benefits from their erstwhile employers abroad.

    Students who have gone abroad for training or studies are not eligible for this facility, after their return to India.


    Salient Features of the RFC Account:

    Types of accounts: RFC account can be maintained in the form of savings/current account or fixed deposit. No cheque books are issued.

    Type of Currency: RFC account can be maintained in any convertible currency.

    Eligible Credits:

    1. The entire amount of foreign currency brought to India at the time of returning for permanent settlement as well as balance in the NRE/FCNR account at the time of return can be credited to RFC account. [Currency Declaration Form required if the amount of Currency notes is in excess of USD.5000/- or equivalent]
    2. Foreign Currency brought to India in the form of Foreign Currency notes/Travellers cheques, duly declared to customs at the time of arrival on the Currency Declaration Form (CDF).
      [CDF required if the amount exceeeds USD 10,000/- or equivalent]
    3. The Entire income from overseas assets (for e.g. dividend/interest, etc) or sale proceeds of overseas assets.
    4. Pension received from abroad.
    5. Transfer from other RFC account of the account holder.


    Utilisation of Balances in RFC accounts:
    1. Balance in RFC can be freely utilised by the account holder for any bonafide remittance outside India through a normal banking channel.
    2. Local disbursement is freely allowed.
    3. Conversion to FCNR/NRE accounts, if the account holder acquires NRI status in future.
    4. The interest in foreign currency is payable on RFC accounts based on the market rates and the banks quote their own rates.


    Nomination:
    • RFC account/s have the nomination facility.
    • On account of death of the RFC account holder, the balance in the account can be repatriated to the Non-Resident nominee to the extent of his/her entitlement.
    • However, if the nominee is a person Resident in India, the amount can be paid to him in Indian Rupees only.


    Loans/Overdrafts:
      Loans / Overdrafts cannot be granted against balances in RFC account/s.