When you move back to India after years abroad, your banking situation changes immediately. Your NRE account and FCNR(B) account are both built for non-residents. The moment you return permanently, RBI rules require you to redesignate or close them.
But what happens to the foreign currency savings you spent years building? You should not have to convert everything to rupees on the day you land.
That is what the RFC account (Resident Foreign Currency account) is designed to solve. It lets returning NRIs hold foreign currency savings at an Indian bank, in the original currency, even after they become residents again. It is governed by RBI under the Foreign Exchange Management Act (FEMA)
What is an RFC account?
An RFC account (Resident Foreign Currency account) is a bank account that lets a returning NRI hold foreign currency in India. Instead of converting your dollars or pounds to rupees when you come home, you move them into an RFC account and keep them in their original currency.
The account is governed under RBI's Foreign Currency Accounts regulations, specifically the Foreign Exchange Management (Foreign Currency Accounts by a Person Resident in India) Regulations, 2015, updated on January 15, 2025. You can read the full regulatory text on the RBI's official FAQ on foreign currency accounts.
One point worth clarifying: many people confuse the RFC account with the RFC(D) account, or Resident Foreign Currency Domestic account. These are two different products. The RFC(D) is a non-interest-bearing current account that any resident in India can open if they receive foreign currency from services rendered outside India, such as freelance work for a foreign client. It is not for returning NRIs and their overseas savings.
The RFC account, by contrast, is only for returning NRIs. It can be held as a savings account, current account, or term deposit. It earns interest. And it is specifically tied to assets you built during your time abroad.
Benefits of an RFC account
The most immediate benefit is that you do not have to convert your foreign savings to rupees the moment you land. You can hold dollars, pounds, or euros in India and decide when, or whether, to convert.
Beyond that, an RFC account gives you currency protection. If the rupee depreciates after you return, the value of your foreign currency savings in INR terms goes up, not down.
The account is fully repatriable. You can send the money back outside India at any time without RBI approval.
And if your plans change and you go abroad again, your RFC balance can be moved directly to an NRE or FCNR(B) account without any fresh regulatory clearance.
Who can open an RFC account?
You can open an RFC account if you are now a resident in India and you were previously an NRI or Person of Indian Origin (PIO) under FEMA. The account is not available to someone who has always been a resident and never held NRI status.
RBI specifies which funds are eligible to go into an RFC account. The permitted sources are:
- Funds held in your NRE savings, current, or FCNR(B) accounts at the time you returned to India
- Foreign currency assets you held abroad on the date of your return (these are protected under Section 6(4) of FEMA, which lets you retain overseas assets that were lawfully acquired while you were an NRI)
- Pension or superannuation amounts received from an overseas employer after your return
- Proceeds from a life insurance policy held with a foreign insurer
- Income earned on investments held outside India during the years you were an NRI
Priya worked in the US for 11 years. When she returned to India, she had $90,000 sitting in her Chase savings account and $30,000 in an NRE fixed deposit. Both are eligible. She can transfer both amounts into her RFC account and continue to hold her savings in US dollars without converting a single rupee on day one.
When your NRI status changes to resident, your NRE savings and current accounts need to be closed or redesignated. The proceeds can go straight into your RFC account. If you want a step-by-step walkthrough of that process, our guide on converting your NRE account covers it in full.
One more thing on eligibility: a resident Indian who has always lived in India and was never an NRI cannot open an RFC account. The account is tied to the transition from non-resident back to resident status.
What currencies does an RFC account accept?
RFC accounts are typically offered in major foreign currencies. The most common ones available at Indian banks are US dollars (USD), British pounds (GBP), euros (EUR), Australian dollars (AUD), Canadian dollars (CAD), Japanese yen (JPY), Swiss francs (CHF), and Singapore dollars (SGD).
The exact currency list depends on the bank. Before you open an account, confirm which currencies your chosen bank supports.
Your balance stays in the foreign currency you deposited. If you opened an RFC account in USD, your balance remains in USD and interest is also paid in USD. You are not converting to rupees unless you choose to withdraw in INR.
Some banks let you hold multiple currencies with the same institution. Whether that means one account with multiple currency wallets or separate accounts per currency varies by bank, so it is worth asking before you set things up.
| Feature | RFC account | FCNR(B) account | NRE account |
|---|---|---|---|
| Who it's for | Returning NRIs (now resident in India) | NRIs living abroad | NRIs living abroad |
| Currency held | Foreign currency | Foreign currency | Indian rupees (INR) |
| Account types available | Savings, current, or term deposit | Term deposit only | Savings, current, or term deposit |
| Interest taxable in India | Yes, at your income tax slab rate | No (fully exempt) | No (fully exempt) |
| Fully repatriable | Yes | Yes | Yes |
| Joint account with | A resident relative (former or survivor basis) | Other eligible NRIs | Other eligible NRIs |
| What happens when you return | This is what you open | Transfer to RFC at maturity or early closure | Close or redesignate; proceeds go to RFC |
The simple way to think about this: NRE and FCNR(B) are for NRIs still living abroad. RFC is for the ones who have come home.
For a deeper look at all the NRE, NRO, and FCNR account options you have during your time abroad, that article explains each account type in detail. If you want to decide what to do with your FCNR(B) deposits before or after returning, our complete FCNR account guide walks through how FCNR works, how interest is calculated, and what your options are at maturity.
Tax treatment of RFC accounts
Interest earned on your RFC account is taxable in India. It is added to your total income and taxed at your applicable income tax slab rate for that financial year.
Banks deduct TDS (Tax Deducted at Source) on RFC account interest. If you have provided your PAN, TDS is deducted at the rate applicable to your income bracket. Without PAN, the TDS rate defaults to 20%. You can claim credit for any TDS deducted when you file your income tax return.
Some sources suggest that RFC account interest may be tax-free during your RNOR (Resident but Not Ordinarily Resident) period. This claim is not accurate and can lead to costly mistakes. The RNOR benefit applies to income that is sourced from outside India, such as dividends from foreign stocks or rent from a property abroad. RFC account interest accrues inside India at an Indian bank. It is Indian-sourced income, and the RNOR exemption does not extend to it.
Your RNOR status can still help with your broader tax planning, particularly if you have active income from overseas during the transition period. But for the RFC account specifically, treat the interest as fully taxable from day one. For a full breakdown of what RNOR covers and how long it lasts, read our guide on RNOR status.
If you are returning from the US, there is one more angle to consider. An RFC account is a foreign financial account from the US tax perspective. Depending on your US tax status and the balance in the account, you may need to report it under FBAR and FATCA rules. Speak with a cross-border tax advisor before you file your first return after returning.
How to open an RFC account
You do not need RBI permission to open an RFC account. It is a standard product offered by authorised dealer banks in India, and you open it directly at the bank.
The documents you will typically need are:
- A valid Indian passport
- Proof of NRI status such as an old work visa, residency permit, or employer letter from abroad
- Proof of return to India, for example the arrival stamp in your passport or a recent utility bill at your Indian address
- Your PAN card
- Passport-size photographs
- Source of funds documentation, such as an overseas bank statement, an NRE account closure letter, or FCNR maturity advice
Once the account is open, you fund it by transferring from your NRE savings or current account, or by remitting from your overseas bank account directly.
For your FCNR(B) fixed deposits, you have two choices. You can wait for the deposit to mature and transfer the proceeds to your RFC account at that point. Or you can break the deposit early, though most banks charge a penalty for premature closure. Whether the penalty is worth paying depends on how soon you need the funds in RFC form and what the remaining term is.
Most major Indian banks with international presence offer RFC accounts. The opening process is usually straightforward if your documents are in order.
What if you go abroad again?
The RFC account does not lock you in permanently. If you take up employment abroad again and reacquire NRI status under FEMA, you can transfer your RFC balance to an NRE or FCNR(B) account. No RBI approval is needed for that conversion either.
This makes the RFC account a practical holding structure for NRIs who are uncertain about whether they will stay in India long term. You are not stuck with it.
Conclusion
An RFC account is designed for one specific situation: you lived abroad as an NRI, you built savings in foreign currency, and now you are back in India. It lets you hold those savings in their original currency at an Indian bank, without converting everything to rupees on arrival. The interest is taxable, but the structure is flexible and reversible if your plans change.
Frequently asked questions
Can an NRI open an RFC account?
An NRI currently living abroad cannot open an RFC account while they are still a non-resident. The RFC account is for individuals who have returned to India and become resident under FEMA. Once you return permanently and your status changes to resident, you become eligible. Until that point, NRE and FCNR(B) accounts are the right options for holding foreign currency savings while you are abroad.
What is the difference between an RFC and an NRE account?
The key difference is who each account is for. An NRE account is for NRIs living abroad. It holds Indian rupees, and interest is fully exempt from Indian income tax.
An RFC account is for NRIs who have returned to India and become resident. It holds foreign currency, and interest is taxable in India at your income tax slab rate. Both accounts are fully repatriable, meaning you can send funds out of India freely. But they serve different stages of your journey.
Can an NRE account be converted to an RFC account?
When you return to India and your status changes from non-resident to resident, your NRE savings and current accounts need to be closed or redesignated.
The balance can be transferred directly into an RFC account. This is one of the most common ways returning NRIs fund their RFC account.
For FCNR(B) fixed deposits, you can either wait until maturity and transfer to RFC, or break the deposit early subject to a penalty at most banks.
Can a resident Indian who was never an NRI open an RFC account?
No. The RFC account is only for individuals who previously held NRI status under FEMA and are now returning to India as residents.
A resident Indian who has always lived in India and was never an NRI is not eligible.
If a resident Indian receives foreign currency from rendering services outside India, the relevant product is the RFC(D) (Resident Foreign Currency Domestic) account, which is a separate, non-interest-bearing current account and not the same as the RFC account for returning NRIs.