RFC(D) Full Form - Resident Foreign Currency (Domestic)

Resident Foreign Currency (Domestic) Account: Features, Benefits, and Regulations 

Introduction 

A Resident Foreign Currency (Domestic) [RFC(D)] Account is a type of bank account designed for individuals who were previously Non-Resident Indians (NRIs) but have now returned to India. This account enables them to hold their foreign earnings in foreign currency even after resettling in India. The scheme offers flexibility in managing forex holdings while complying with Reserve Bank of India (RBI) regulations. 

What is a Resident Foreign Currency (Domestic) Account? 

An RFC(D) Account allows returning NRIs to deposit and maintain their foreign currency earnings in India. This account provides liquidity and protection against forex fluctuations, enabling seamless international transactions without currency conversion losses. 

Key Features of RFC(D) Account: 

• Eligibility: Only returning NRIs and Persons of Indian Origin (PIOs) can open this account. 

• Currencies Allowed: Deposits can be maintained in major foreign currencies like USD, GBP, EUR, and JPY. 

• No Conversion Requirement: Funds remain in foreign currency, reducing exchange rate risks. 

• Withdrawals: Funds can be used freely for permitted transactions. 

• Repatriability: In certain cases, funds can be repatriated abroad. 

Types of RFC(D) Accounts 

1. Savings RFC(D) Account: Allows regular deposits and withdrawals, earning nominal interest. 

2. Fixed Deposit RFC(D) Account: Offers higher interest rates for fixed tenures. 

3. Current RFC(D) Account: Designed for business-related transactions, offering easy access to funds without interest. 

Benefits of an RFC(D) Account 

1. Protection Against Forex Fluctuations 

Holding funds in a foreign currency shields account holders from rupee depreciation. 

2. No Tax on Interest for RNOR Status 

Returning NRIs classified as Resident but Not Ordinarily Resident (RNOR) enjoy tax exemptions on interest earned for a specific period. 

3. Repatriation Flexibility 

Funds in an RFC(D) account can be repatriated overseas without restrictions in case of re-migration. 

4. Easy Transition to NRE/NRO Accounts 

If the account holder becomes an NRI again, the balance can be transferred to an NRE (Non-Resident External) or FCNR (Foreign Currency Non-Resident) account. 

How to Open an RFC(D) Account? 

Eligibility Requirements 

• The applicant must be a returning NRI or PIO who has permanently resettled in India. 

• Proof of past NRI status and foreign income sources must be provided. 

Documents Required 

• Passport and visa details. 

• Proof of foreign earnings (salary slips, tax returns, bank statements). 

• Indian address proof. 

• PAN card for tax compliance. 

Steps to Open an Account 

1. Choose a Bank: Select an RBI-authorized bank that offers RFC(D) accounts. 

2. Submit Application: Provide the required documents and complete the account opening form. 

3. Deposit Foreign Currency: Transfer eligible foreign currency funds into the account. 

4. Activate the Account: Once verified, the bank activates the account, Regulations and Compliance 

• The RBI governs RFC(D) accounts under the Foreign Exchange Management Act (FEMA) regulations. 

• No restrictions exist on the number of RFC(D) accounts an individual can hold. 

• Interest earned is subject to taxation in India, except for RNOR status holders. 

• Funds can be used for any permitted transactions, including investments, travel, and business. 

The Resident Foreign Currency (Domestic) Account is a valuable financial tool for returning NRIs, helping them manage their foreign earnings without exposure to currency fluctuations. By understanding its features, benefits, and regulatory aspects, individuals can make informed decisions about maintaining their forex reserves effectively. Whether planning for future migration or investing in India, an RFC(D) account ensures financial flexibility and security.