After opening an RFC account, an NRI can transfer foreign earnings into it via wire transfer, foreign currency cheques, or by moving from existing non-resident (external) account (NRE) or non-resident ordinary rupee account (NRO) accounts.
It is important for non-resident Indians (NRIs) returning to India to have a savings account maintained in foreign currencies, where they can park their money safely. This account is called a resident foreign currency (RFC) account wherein foreign currencies in the United States Dollar (USD), Great British Pound (GBP), or the euro (EUR) are kept in a savings account. An NRI who has lived overseas for at least one year is eligible to open an RFC account.
Through this account, the NRIs get the main advantage of no ‘currency conversion’ charges. While it provides safe parking for your foreign currency funds, it can also be funded with any convertible foreign currency. Most importantly, this money can again be transferred back to a non-resident external account (NRE)/ foreign currency non-resident account (FCNR) account, if you change your status to an NRI.
You can withdraw cash in INR by filling in an application on plain paper. According to the customer’s instructions, the foreign currency balance will be first converted to INR as per the current rate and then paid out in cash or credited to the rupee account. The customer needs to submit a copy of his/her PAN card after withdrawing money to the extent of Rs 50,000 and above. One needs to provide a valid passport copy or any valid photo identity document such as driving license, election card, PAN card, or employee card, among others to do cash withdrawal.
How To Open RFC Account: To open an RFC account, you must follow the following procedures:
You need to collect a duly filled RFC account form from a nearby bank. You can also download the form from the bank’s official website.
You need documents such as self-attested copies of your passport, expired work permit/employment visas, and current Indian residence address proof.
Post due diligence by the bank and verification of these documents, the bank will open the RFC account and provide details to the customer.
Keep In Mind: You can receive income earned overseas such as dividends, rent, sale proceeds of an asset, pension, and other benefits, etc. coming from employment outside India. While interest will be earned on these deposits, a nominee can also be added to the account. Your resident relative can be a joint holder in an RFC account on a ‘former or survivor’ basis. Moreover, cash withdrawals from this account will be in Indian rupee. The interest earned by you from an RFC account is completely tax-exempt until the account holder gets resident status.