RFC Account: Rules for CCFE
A resident's foreign currency account for money tied to their years abroad, free to use outside India.
An RFC account lets a resident Indian keep certain foreign currency in foreign currency, in India, with no obligation to convert it. It exists mainly for people who earned or built assets abroad and have come home: their pension from an overseas employer, the proceeds of a flat they bought in Dubai while working there, their old NRE and FCNR(B) balances.
It is a resident account under the Foreign Exchange Management (Foreign Currency Accounts by a person resident in India) Regulations, 2015 (FEMA 10(R)). The test for eligibility is the source of the money, not how long the person lived abroad.
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What Can Be Credited to an RFC Account
A person resident in India may open an RFC account with an AD bank out of foreign exchange received or acquired:
- check_circleas pension, superannuation or other monetary benefits from an overseas employer;
- check_circleby converting assets acquired while non-resident, or inherited from or gifted by a person resident outside India, and repatriated to India;
- check_circlebefore July 8, 1947, or income on such holdings kept abroad with RBI permission;
- check_circleas LIC or other life-insurance claim, maturity or surrender proceeds settled in foreign currency by an IRDAI-licensed insurer in India;
- check_circlefrom the holder's NRE or FCNR(B) balances when their status changes from non-resident to resident.
Key Operating Rules
- Use of funds
- Free from all restrictions on use of the foreign currency outside India. The holder can remit, invest or spend abroad without a separate permission.
- Forms and interest
- Current, savings or term deposit. Interest is deregulated, meaning each AD bank sets its own rate.
- Joint holding
- With a resident relative on a 'former or survivor' basis; the resident relative cannot operate it during the account holder's lifetime.
- Conversion obligation
- None. Unlike EEFC, RFC balances do not have to be converted to rupees by any date.
- Death of holder
- A non-resident nominee can be paid his share abroad; a resident nominee who wants to remit for the deceased's liabilities abroad applies to RBI.
Eligible-credit and usage MCQs. No signup.
RFC vs RFC(D)
The two names are close, and so are the exam options. The difference is the kind of foreign exchange each one takes.
Who opens
RFC
A person resident in India with eligible foreign exchange
RFC(D)
A resident individual
Typical source
RFC
Overseas pension, assets acquired while non-resident, NRE/FCNR(B) on return
RFC(D)
Notes, coins and travellers cheques from overseas sources: earnings on a visit abroad, gifts from relatives, unspent travel forex
Use of funds
RFC
Free from all restrictions abroad
RFC(D)
Current or capital account transactions as permitted under FEMA
Account form
RFC
Current, savings or term deposit; interest set by the bank
RFC(D)
Current account only; non-interest earning
Monthly conversion
RFC
Not required
RFC(D)
Accruals in a month converted by end of the following month after approved uses
| Feature | RFC | RFC(D) |
|---|---|---|
| Who opens | A person resident in India with eligible foreign exchange | A resident individual |
| Typical source | Overseas pension, assets acquired while non-resident, NRE/FCNR(B) on return | Notes, coins and travellers cheques from overseas sources: earnings on a visit abroad, gifts from relatives, unspent travel forex |
| Use of funds | Free from all restrictions abroad | Current or capital account transactions as permitted under FEMA |
| Account form | Current, savings or term deposit; interest set by the bank | Current account only; non-interest earning |
| Monthly conversion | Not required | Accruals in a month converted by end of the following month after approved uses |
How CCFE Tests This
The common MCQ lists four credits and asks which is eligible for RFC. The right answer is foreign income or assets linked to the person's non-resident past (dividends on foreign shares held abroad, an overseas pension). Distractors are rupee deposits, income from Indian property, or gifts from resident relatives, none of which qualify. The second trap is the eligibility period: older material ties RFC to a minimum stay abroad, while the current regulation ties it to the source of the foreign exchange.
FAQs
Who can open an RFC account?expand_more
A person resident in India who holds eligible foreign exchange, typically a returning NRI with an overseas pension, assets acquired while abroad, or NRE and FCNR(B) balances converted on return.
Can RFC account funds be used abroad?expand_more
Yes. RFC balances are free from all restrictions on use outside India, so the holder can remit or invest abroad from them.
Can an NRE deposit be transferred to an RFC account on return to India?expand_more
Yes. NRE and FCNR(B) balances can be credited to RFC when the holder becomes resident, and RBI's interest-rate directions waive the premature-withdrawal penalty for that conversion.
What is the difference between RFC and RFC(D)?expand_more
RFC holds foreign exchange linked to the holder's non-resident past and is free for use abroad. RFC(D) holds foreign currency notes and travellers cheques from overseas sources, and its monthly accruals must be converted to rupees by the end of the next month after approved uses.
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