🏦 Deposit Accounts
Complete guide to FC deposit accounts for residents and non-residents - RFC, RFCD, EEFC, FCNR, NRE, NRO accounts
Overview of FC Deposit Accounts
Foreign Currency Deposit Accounts are specialized banking accounts that allow individuals to hold funds in foreign currencies. These accounts are regulated by RBI under FEMA guidelines.
Accounts for Residents
Resident Indians can open the following FC accounts:
1. Resident Foreign Currency (RFC) Account
| Parameter | Details |
|---|---|
| Who can open | Returning Indians (erstwhile NRI) who returned on/after 18.4.1992 |
| Continuous stay outside India | Minimum 1 year |
| Account type | Single or joint a/c with eligible person |
| Joint (F/S) | Allowed with resident relative (as per Companies Act 2013) |
| Types available | CA, SB, Term Deposit account |
| ROI & Period of FDR | Bank discretion (7 days to 10 years) |
Credits allowed:
- Inward remittance of balances in FC accounts
- Income, dividend, sale proceeds of assets
- Pension, monetary benefits
- Interest earned on RFC account
- Transfers from other RFC accounts, NRE or FCNR
Debits allowed:
- Funds can be freely used for bona fide remittances overseas.
- LRS limits not applicable.
Balance in existing non-resident accounts when becoming resident:
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Overview of FC Deposit Accounts
Foreign Currency Deposit Accounts are specialized banking accounts that allow individuals to hold funds in foreign currencies. These accounts are regulated by RBI under FEMA guidelines.
Accounts for Residents
Resident Indians can open the following FC accounts:
1. Resident Foreign Currency (RFC) Account
| Parameter | Details |
|---|---|
| Who can open | Returning Indians (erstwhile NRI) who returned on/after 18.4.1992 |
| Continuous stay outside India | Minimum 1 year |
| Account type | Single or joint a/c with eligible person |
| Joint (F/S) | Allowed with resident relative (as per Companies Act 2013) |
| Types available | CA, SB, Term Deposit account |
| ROI & Period of FDR | Bank discretion (7 days to 10 years) |
Credits allowed:
- Inward remittance of balances in FC accounts
- Income, dividend, sale proceeds of assets
- Pension, monetary benefits
- Interest earned on RFC account
- Transfers from other RFC accounts, NRE or FCNR
Debits allowed:
- Funds can be freely used for bona fide remittances overseas.
- LRS limits not applicable.
Balance in existing non-resident accounts when becoming resident:
| Account Type | Treatment |
|---|---|
| NRE account | To be transferred immediately |
| FCNR balance | Transferable on maturity |
| NRO account | To be designated as Resident account |
📌 Example: Mr. Sharma worked in the USA for 5 years and returned to India in 2023. He has USD 50,000 saved from his salary. He opens an RFC account to keep his FC savings in dollars. He can use this for future foreign trips or remit to his children studying abroad - without any LRS limits applying.
2. Resident Foreign Currency Domestic (RFC-D) Account
| Parameter | Details |
|---|---|
| Who can open | Resident Indians including joint account with eligible persons |
| Account type | Only Current account can be opened |
| Cheque book | Facility allowed |
| Interest | No interest payable |
Credits allowed:
- FC funds received during visit abroad
- Honourarium or gift from close relative
- Through authorised channels
- Unspent FC
- Earning by export of goods/services
- Disinvestment of American Depository Receipts (ADR) or Global Depositary Receipts (GDR)
Debits allowed:
- Permitted current and capital account transactions
- Within LRS (Liberalised Remittance Scheme) limit
On change of status as NRI:
- Balance can be transferred to NRE/FCNR account
Conversion Rule:
- FC Amount credited during a particular month → to be converted into Indian currency by last day of next month
📌 Example: Mrs. Gupta, a resident, visited London for a conference. She received GBP 2,000 as honorarium. She deposits this in her RFC-D account on March 15. She must convert it to INR by April 30 (last day of next month). If she becomes an NRI later, she can transfer this to NRE/FCNR.
3. Exchange Earners' Foreign Currency (EEFC) Account
| Parameter | Details |
|---|---|
| Who can open | Individuals, entities resident in India. SEZ units cannot open (they are allowed to open FC accounts separately) |
| Account type | No interest Current a/c (cheque book allowed) |
| Joint (F/S) a/c | With close resident relative allowed. Relative not to operate a/c during life time of main a/c holder |
Credits allowed:
- 100% of FC earning
- Advance remittance
- Disinvestment proceeds of ADR/GDR
- Professional earnings
- Recredit of FC drawn earlier
- Payments from 100% Export Oriented Units (EOU), Export Processing Zones (EPZ), Special Economic Zones (SEZ) in domestic tariff area
Debits allowed:
- Permitted current and capital account payments
- Adjustment of pre-shipment and post-shipment loans
- Credit to NRE-FCNR a/c on change of status
- Trade credit / advance payments by exporters to their importers
Conversion Rule:
- FC Amount credited during a particular month → to be converted into Indian currency by last day of next month after adjusting forward commitments
- Loans not allowed against balance in EEFC account.
📌 Example: ABC Exports Ltd. receives USD 100,000 from a US buyer on June 10 for exporting textiles. They credit this to their EEFC account. They have USD 30,000 forward contract commitment for importing machinery next month. By July 31, they must convert the remaining USD 70,000 to INR. The USD 30,000 can be retained for their import payment.
4. Diamond Dollar Accounts
| Parameter | Details |
|---|---|
| Who can open | Firms/Companies dealing in purchase/sale of rough or cut and polished diamonds / precious metal jewellery etc. |
| Eligibility criteria | Track record of 3 years in import/export AND having 3 year average turnover of Rs.3 cr or above |
| Max no. of accounts | 5 |
| Currency | US Dollars |
| Account type | Non-interest bearing Current account |
| CRR and SLR | Applicable |
⚠️ Update (Govt. notification 29.4.25): Track record period increased from 2 years to 3 years
Conversion Rule:
- FC Amount credited during a particular month → to be converted into Indian currency by last day of next month
Reporting:
- AD banks are to send quarterly report to RBI within 10 days from close of the quarter
📌 Example: Diamond Gems Pvt Ltd has been exporting polished diamonds for 4 years with average annual turnover of Rs.5 crore. They open a Diamond Dollar Account to receive USD payments from Belgium buyers. They maintain USD in this account for paying their rough diamond suppliers in Antwerp. Any USD credited in May must be converted to INR by June 30.
Accounts for Non-Residents
Non-Resident Indians (NRIs) and Persons of Indian Origin (PIOs) can open:
1. Foreign Currency Non-Resident (Bank) Account - FCNR(B)
| Parameter | Details |
|---|---|
| Who can open | NRIs and PIOs (Pakistani & Bangladeshi with RBI permission) |
| Account type | Single or Joint can be opened |
| Joint (F/S) | With resident relative allowed |
| Power of Attorney | Resident relative POA holder can operate for local payment and remittance in a/c holder's name |
| Type of account | FD only 1 to 5 years. RD cannot be opened |
| Currency | Any freely convertible currency |
Interest:
- Ceiling interest fixed by RBI
- LIBOR phase out w.e.f. 31.12.21. Banks adopted ARR (Alternate Reference Rate), published by FBIL (Financial Benchmark India Limited)
- Intt. reset period for floating ROI - 6 months
Interest Rate Ceiling (as per RBI):
| Tenor | New Rate (w.e.f. 06.12.24 to 31.03.25) |
|---|---|
| 1 year to less than 3 years | ARR + 4% |
| 3 years to 5 years | ARR + 5% |
Interest Compounding:
- 1 year deposit → No compounding of interest
- Above 1 year → Intt. compounding on 180 days basis
Cancellation & Overdue:
- Cancellation before 1 year → No interest
- Overdue FD can be renewed from back date within 14 days from date or maturity
Loan against FCNR(B):
- Up to full value of FDR less margin
- To depositor or 3rd party, in India or outside India
- In FC/INR. Credit proceeds to NRO a/c
- Loan margin/ROI at bank discretion
- Loan repayment out of inward remittance or NRO balance
- FC risk - to be borne by bank
Debits:
- Interest & principal fully repatriable
- Local payment allowed
Tax:
- Interest not taxable. TDS not applicable
Other Important Points:
- Proceeds on maturity can be sent in name of 3rd parties on request from account holder
- Conversion of FCNR to NRE to be treated as pre-mature withdrawal
- Additional interest not to be paid to specified categories including staff
- Change in status to resident → A/c allowed as FCNR till maturity at discretion of account holder
- Transfer of balance: FCNR to NRE-RA @ TT Buying Rate and NRE to FCNR @ TT Selling Rate
📌 Example: Dr. Patel, an NRI doctor in UK, wants to invest his GBP savings securely in India. He opens an FCNR(B) account with 3-year FD of GBP 50,000 at ARR+5% interest. The bank bears the FC risk. On maturity, he can repatriate the full amount (principal + interest) to UK tax-free. If GBP appreciates against INR, he benefits; if it depreciates, the bank absorbs the loss.
2. Non-Resident External - Rupee Account (NRE-RA)
| Parameter | Details |
|---|---|
| Who can open | NRIs and PIOs (Pakistani & Bangladeshi with RBI permission) |
| Account type | Single or Joint |
| Joint (F/S) | With resident relative (defined as per Companies Act) allowed |
| Account types | SB, CA, RD, FD (Min 1 year max bank discretion) |
| Currency | INR |
| Rate of Interest | Bank discretion. Not more than domestic rates |
| Power of Attorney | Resident relative POA holder can operate for local payment and remittance in a/c holder's name |
Loan against NRE:
- Up to full value of FDR less margin
- To depositor or 3rd party, in India or outside India through correspondents bank
- In FC/INR. Loan amount not repatriable
- Loan margin/ROI at bank discretion
- Loan repayment out of balance in a/c, inward remittance or NRO balance
- FC risk - Borne by customer
Tax:
- Interest / principle not taxable to Income/Wealth tax
Credits:
- Inward remittance from outside India
- Interest accruing in the account or on investment
- Transfer from other NRE / FCNR(B) accounts
- Maturity proceeds of investments (made from this account or through inward remittance)
- Current income (rent, dividend, pension, interest)
Precaution: Only credits having repatriable character
Debits:
- Local disbursements
- Remittance outside India
- Transfer to other NRE / FCNR(B) accounts
- Investments in India
Transfer of balance:
- FCNR to NRE-RA @ TT Buying Rate
- NRE to FCNR @ TT Selling Rate
📌 Example: Ms. Mehta, an NRI in Canada, remits CAD 10,000 monthly to her NRE account. She receives rent Rs.50,000/month from her Delhi flat - this too can be credited as it's repatriable income. She uses the NRE balance to pay her parents' expenses locally. The interest she earns is completely tax-free in India. She can anytime remit the entire balance back to Canada.
3. Non-Resident Ordinary (NRO) Account
| Parameter | Details |
|---|---|
| Who can open | NRIs & PIOs (including individual Bangladeshi) - Pakistani & B-Desi Entities with RBI consent |
| Minority community | Minority community citizens of Pakistan and Bangladesh can open one NRO account with AD |
| Account type | Single or joint allowed (amongst NRI and PIO) |
| Joint (F/S) | With resident relative (defined in Companies Act) - joint a/c allowed |
| Account types | CA, SB, RD, FD (ROI and FD period as per resident account) |
| Currency | INR |
| How to open | Fresh Inward Remittance. Existing a/c to be designated as NRO on change of status from Resident to NRI |
| Change of status | Account to be designated resident a/c (when NRI becomes Resident) |
- F/S: Former Survivor Account
Income Tax:
- All interest payments are taxable
- TDS applies @ 30% on interest on local funds
- TDS @ 20% on FIR (Fixed Interest Rate deposits)
- Post offices can open saving a/c - with same conditions
Loan against NRO:
- Up to full value of FDR less margin
- To depositor or 3rd party, in India only
- Loan margin/ROI at bank discretion
Power of Attorney:
- Resident relative POA holder can operate for local payment and remittance in a/c holder's name
Credits:
- Inward remittances from outside India
- Legitimate dues in India
- Transfers from other NRO accounts
- Rupee gift / loan made by a resident to a NRI/PIO relative within LRS limits
Debits:
- Local payments
- Transfers to other NRO accounts
Repatriation:
- Remittance of current income abroad
- Balances can be remitted overseas or transferred to NRE A/c up to USD 1 million/FY along with other eligible assets
📌 Example: Mr. Verma, an NRI in Dubai, has ancestral property in India. He sells it for Rs.2 crore. The sale proceeds go to his NRO account. He also receives rent (Rs.40,000/month) from another property. Bank deducts TDS @ 30% on the interest. He can repatriate up to USD 1 million per year from this account after paying applicable taxes and obtaining CA certificate.
4. Special Non-Resident Rupee Account (SNRR)
| Parameter | Details |
|---|---|
| Who can open | Persons resident outside India and doing business in India. Account to carry nomenclature of business |
| Pakistani/Bangladeshi | Pakistani and Bangladesi nationals/entities need RBI permission |
| Account duration | Concurrent to tenor of business but max up to 7 years. SNRR for making investments as per FEMA can continue beyond 7 years |
| Type of account | Non-interest bearing Current account |
Transactions:
- Transactions incidental to and commensurate to business transactions
- Investments made in India
- Export of goods and services
- Trade credit transactions
Repatriation & Tax:
- Balances eligible for repatriation (no transfer from NRO)
- Transactions subject to Indian taxation law
📌 Example: A UK-based consulting firm "TechAdvisors Ltd" signs a 5-year IT services contract with Indian companies. They open an SNRR account named "TechAdvisors Ltd - India Operations". Indian clients pay consultancy fees into this account. The firm uses it to pay local vendors, office expenses, and GST. When their 5-year contract ends, they can repatriate the remaining balance to UK. (Note: SNRR account tenure is concurrent to business tenure, max 7 years)
5. NRO Account of Foreigners (Short Visit)
| Parameter | Details |
|---|---|
| Who can open | Foreigners during short visit to India |
| Account type | NRO (CA/SB) |
| Account duration | Up to 6 months |
Credits:
- Remittance through approved channels
- FC brought
Debits:
- No local credit, except accrued interest
- Balance may be paid to depositor on his departure from India
If not closed within 6 months:
- RBI permission required for remittance abroad
6. NRO Account of Foreign Students in India
| Parameter | Details |
|---|---|
| Who can open | Foreign students in India (Pakistani students need RBI permission) |
| KYC documents | Passport + appropriate visa & immigration endorsement + letter of offer from educational institution |
| Address proof | Passport to contain address and Id proof, in home country |
Within 30 days of opening:
- Student to submit proof of local address (rent agreement or hostel facility)
During such 30 days (restrictions apply):
- Max inward remittance: USD 1000
- Max withdrawal: Rs.50000
After submitting local address proof:
- Account to be treated as normal NRO account
FC Accounts Abroad by Indian Entities
Indian entities can open FC accounts abroad in certain circumstances:
| Category | Details |
|---|---|
| Trade Fair Participants | Participants in international exhibitions / trade fair can open temporary FC accounts abroad. Balance to be remitted to India max within one month from end of such exhibition / trade fair |
| Exporters | Exporters with good track record can open FC accounts in India or abroad with RBI permission |
| Branch/Subsidiary abroad | Indian entity having branch / subsidiary abroad can open FC account outside India |
| SEZ units | SEZ units can open FC accounts with banks in India |
Nomination Facility
- Available in accounts of individuals
- Same as domestic deposit accounts
- Nominee can claim the balance in case of death of account holder
Comparison: Resident FC Accounts
| Feature | RFC | RFC-D | EEFC | Diamond $ |
|---|---|---|---|---|
| Eligibility | Returning NRIs (1+ year abroad) | Any Resident Indian | Residents earning FC (SEZ cannot open) | Diamond traders (3yr track, Rs.3cr turnover) |
| Account Types | CA, SB, FD | CA only | CA only | CA only (Max 5) |
| Currency | FC | FC | FC | USD only |
| Interest | Yes (bank discretion) | No | No | No |
| Joint A/c | Resident relative (F/S) | Eligible persons | Relative (F/S) - cannot operate | N/A |
| Cheque Book | Available | Available | Available | Available |
| Main Credits | Inward remittance, NRE/FCNR transfers | FC from visits, exports, ADR/GDR | 100% FC earnings, ADR/GDR | Diamond trade receipts |
| Conversion Deadline | No mandatory conversion | End of next month | End of next month | End of next month |
| LRS Limit | Not applicable | Applicable | N/A | N/A |
| Loan | N/A | N/A | Not allowed | N/A |
| CRR/SLR | N/A | N/A | N/A | Applicable |
Comparison: NRI Accounts
| Feature | FCNR(B) | NRE | NRO | SNRR |
|---|---|---|---|---|
| Who can open | NRIs & PIOs | NRIs & PIOs | NRIs, PIOs, Foreigners | Non-residents doing business |
| Currency | FC (freely convertible) | INR | INR | INR |
| Account Types | FD only (1-5 yrs) | SB, CA, RD, FD | SB, CA, RD, FD | CA only |
| Repatriation | Fully repatriable | Fully repatriable | USD 1M/FY | Eligible (no NRO transfer) |
| Tax on Interest | Tax-free, No TDS | Tax-free | TDS 30%/20% | Indian tax applies |
| Interest | ARR+4%/5% (RBI ceiling) | ≤ Domestic rates | As resident a/c | No interest |
| Joint with Resident | Allowed (F/S) | Allowed (F/S) | Allowed (F/S) | N/A |
| FC Risk | Bank bears | Customer bears | Customer bears | N/A |
| Loan | Full value less margin | Full value less margin | In India only | N/A |
| Loan Repatriable | Yes | No | N/A | N/A |
| Max Duration | 5 years | Bank discretion | Bank discretion | 7 years |
| Transfer Rate | To NRE @ TT Buying | To FCNR @ TT Selling | N/A | N/A |
Summary Cheat Sheet
| Account | Who Can Open | Type | Currency | Repatriation |
|---|---|---|---|---|
| RFC | Returning NRIs | CA, SB, FD | FC | Yes |
| RFC-D | Resident Indians | CA only | FC | Within LRS |
| EEFC | Exporters (FC earners) | CA only | FC | For business |
| Diamond $ | Diamond traders (3yr track) | CA only (Max 5) | USD | Trade only |
| FCNR(B) | NRIs & PIOs | FD only | FC | Fully |
| NRE | NRIs & PIOs | SB, CA, RD, FD | INR | Fully |
| NRO | NRIs, PIOs, Foreigners | SB, CA, RD, FD | INR | USD 1M/FY |
| SNRR | Non-residents (business) | CA only | INR | Eligible |
Quick Memory Tips
| Account | Remember As |
|---|---|
| RFC | Returning NRIs → Foreign Currency savings |
| RFC-D | Domestic residents → Deadline to convert (next month end) |
| EEFC | Export Earners → FC Current account (no interest) |
| Diamond $ | Diamond traders → $(USD) only, max 5 accounts |
| FCNR(B) | Foreign Currency NRI → Bank bears FC risk, FD only |
| NRE | External earnings → Tax-frEe, Customer FC risk |
| NRO | Ordinary Indian income → Only partial repatriation (USD 1M) |
| SNRR | Special Non-Resident Rupee → 7 years max, business |
Quick Reference - Exam Points
FCNR(B) Account
| Parameter | Value |
|---|---|
| FDR Period | 1 to 5 years (RD cannot be opened) |
| Interest Rate | Ceiling by RBI: ARR+4% (1-3 yrs), ARR+5% (3-5 yrs) |
| FC Risk | Bank bears the risk |
| Loan | Up to full value of FDR less margin |
| Transfer to NRE | @ TT Buying Rate |
NRE Account
| Parameter | Value |
|---|---|
| FDR Period | Min 1 year, max at bank discretion |
| Interest Rate | Bank discretion, not more than domestic rates |
| FC Risk | Customer bears the risk |
| Loan | Up to full value of FDR less margin |
| Transfer to FCNR | @ TT Selling Rate |
NRO Account
| Parameter | Value |
|---|---|
| Joint Account | With resident relative (defined in Companies Act) - F/S allowed |
| Max Repatriation | USD 1 million per FY along with other eligible assets |
| TDS | 30% on interest on local funds; 20% on FIR |
| Foreigner (Short Visit) | Max 6 months; RBI permission if not closed in time |
Resident Accounts
| Account | Key Point |
|---|---|
| RFC | Returning Indians (erstwhile NRI) returned on/after 18.4.1992, min 1 year stay abroad |
| RFC-D | Resident Indians can open; joint with eligible persons allowed |
| EEFC | Joint with close resident relative (F/S), but relative cannot operate during lifetime of main holder |
| Diamond $ | Non-interest bearing CA; Max 5 accounts; 3 year track record required |
Conversion & Transfer Rules
| Scenario | Rule |
|---|---|
| EEFC - FC retention | Convert to INR by last day of next month after adjusting forward commitments |
| RFC on becoming resident | NRE: transfer immediately; FCNR: on maturity; NRO: designated as Resident a/c |
| SNRR max period | 7 years (can extend for FEMA investments) |
| SNRR eligibility | Persons resident outside India doing business in India (Pak/B-desh: RBI permission) |
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