An RFC account is specially designed for returning NRIs to manage their foreign earnings better. Keep reading to know more about this type of bank account and some of its key features and benefits.

India has witnessed tremendous growth in the past decade or more. Moreover, with the work-visa quota shrinking in most international countries, many NRIs are returning to India either permanently or temporarily. However, this poses a challenge. As many of these NRIs still have their foreign currency earnings and assets held abroad, managing them becomes an issue. This is where an RFC (Resident Foreign Currency) account comes to the rescue.

What is an RFC Bank Account?

An RFC account is a savings account that NRIs can use to hold their foreign currency earnings even when they have returned to India. While it allows you to hold your earnings in foreign currency, it comes with many benefits and features. Let’s look at some of them.

  • Deposit in Any Currency: RFC bank account can be opened in any convertible foreign currency. However, it can only be maintained in US dollars or Pounds. It allows returning NRIs to hold their foreign currency earnings even when they are no longer an NRI.
  • Conversion Only at the time of Withdrawal: While you can hold the funds in a foreign currency, withdrawals from the account can be made in INR in India as and when you need. However, since the funds are held in the foreign currency until withdrawal, the conversion risk is much lesser.
  • Manage Your Earnings Abroad While Staying In India: You may have returned from a foreign land but may still hold your investments that could be generating an income for you, such as rent, dividends, sale of assets, etc. All these proceeds can be credited to an RFC bank account without converting them unless it is a currency other than USD or GBP.
  • Manage Investments and Expenses Abroad: Funds in these accounts can be used to invest in foreign markets such as equity investments, real estate, etc. Thus, there is no restriction on the use of funds in this account to invest abroad. You can also use the funds for making expenses abroad. This is very important as you may still have liabilities abroad even when you have returned to India.
  • 100% Repatriation of Funds: If and when your status changes back to NRI, you can repatriate the funds held in the RFC bank account into a bank account abroad or even converted them into FCNR (Foreign Currency Non-Resident) deposits or NRE (Non-Resident External) account without any restrictions. You can also convert your FCNR or NRE account into an RFC bank account on your return to India.
  • Benefits for Citizens Returning Permanently: If you return to India permanently, you can claim some tax benefits on the funds held in your RFC bank account.
  • Ease of Account Opening: For opening an RFC account, all you need is a valid passport copy along with the visa stamp, a PAN card copy, and the RFC declaration form with the affixed photo. All of these documents should be signed by the applicant. You can also add a mandate holder for operating the account on your behalf or even a nominee.

RFC Bank Account- Perfect Solution for Returning NRIs

When you return after working in a foreign land for years, you will most likely have a lot of assets and liabilities to manage. Consolidating them before returning may not be possible. Moreover, your return to India may only be temporary, and you may not want to lose money on the foreign exchange. An RFC bank account can be a perfect solution to help you park your foreign earnings safely as you return to your motherland.