What is the ideal foreign currency account you can opt for when returning home?

No doubt, when returning back to India after spending considerable time abroad, will require plenty of adjustments. If you have inculcated plenty of assets abroad, what do you do about it? What about the NRI accounts which you have created? What about the termed deposits you have invested abroad?

In addition to this, you will also need to take into consideration the change in your resident status. Once your NRI status changes to resident, which occurs when you return back, it can change your NRI accounts, investment and assets. You also need to take into consideration the FEMA (Foreign Exchange Management Act) and the Income Tax Act which is different for residents and NRI’s.

While this may be a lot to take in, you don’t have to do much. You only need to convert your current accounts into a Resident Foreign currency account( RFC ). Even your termed deposits will get converted into this account. Given below are all the details you will need to know about this account and how you can benefit from it.

What is a Resident Foreign Currency Account?
The RFC account is nothing but a foreign currency account, that can be maintained by a resident. This account is best used for NRI’s who are returning back home to India.

Who can open RFC account?
Individuals who hold a NRI status, for a continuous period of not less than a year, and have become a resident in India as per the FEMA conditions can open the RFC account.

How is the funds in the RFC account held?

The funds in the RFC account can be held in selected convertible foreign currency. It can also be held in different forms of savings, current and term deposits account.

What are the benefits of a RFC account?

As an account holder of the RFC account, you will have the following benefits:
• Funds in this account can be freely utilized for any bona fide remittance outside India as compared to other traditional channels.
• The funds, especially the balance is fully repatriable. In this case, the principal and the interest are fully repatriable.
• The funds that are repatriable can be made in foreign currency. This eradicates the risk of conversion rates. The currencies that are freely convertible in the foreign currencies of USD, GBP, Euro, AUD and CAD. However, this depends on the banking institute that you have applied for.
• The funds in the account can be freely remitted abroad or credited to the fresh NRE/FCNR account, if you regain your non – resident status.
What are the eligible credits to the RFC account?

The following credits are eligible to be deposited in the RFC account:

• Proceeds from the sale of eligible assets outside India
• Funds transferred from any other RFC or NRI accounts
• Remittance of funds from bank accounts that qualify as eligible assets outside India.
• Pensions or other similar monetary income from employers outside India
• Incomes such as divide, interest, profit and rent.
• Interest earned on RFC account.


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