Updated on: Apr 14th, 2022
11 min read
A resident of India can open, hold and maintain foreign currency accounts in and outside India. The Foreign Exchange Management (Foreign currency accounts by a person resident in India) Regulations, 2015 regulates the foreign currency accounts opened in India.
A person resident in India can open a foreign currency account in India with an authorised dealer. It is opened, held and maintained in the form of a current or savings or term deposit account. The account can be held either singly or jointly in the name of the person eligible to open, hold and maintain such an account.
A ‘Foreign Currency Account’ means an account held or maintained in a currency that is not the currency of India or Bhutan, or Nepal. Any person who is residing in India can open, hold and maintain a foreign account. ‘Person Resident in India’ is defined under Section 2(v) of the Foreign Exchange Management Act, 1999 (FEMA).
‘Person resident in India’ means—
The major foreign currency accounts which a person resident in India can open are as follows –
Exchange Earner’s Foreign Currency (EEFC) account is in the form of a non-interest bearing current account. Special Economic Zones (SEZ) developers can open, maintain and hold EEFC accounts and credit their foreign exchange earnings to this account. The claims which are settled in rupees by the Insurance companies or the Export Credit Guarantee Corporation of India is not construed as the export realisation in foreign exchange, and thus, the claim amount cannot be credited to this account.
The sum total of the accruals during the current month in the account should be converted into Indian Rupees before the last day of the next month after adjusting for utilisation of the balances for forward commitments or approved purposes. Credit facilities, both non-fund and fund-based, are not granted against the balances held in this account.
The exporters can repay the packing credit advances, whether obtained in foreign currency or Rupee from the balances in their EEFC account up to the extent of exports that have actually taken place.
The balances in EEFC accounts can be credited to Non-Resident External (NRE) account or Foreign Currency Non-Resident (Bank) [FCNR (B)] account at the request or option of the account holders upon the change in the residential status from resident to non-resident. This account is useful for exporters who receive and keep foreign exchange payments in the banks in India.
Resident Foreign Currency (RFC) account can be opened by a person resident in India with an Authorised Dealer (AD) bank in India out of foreign exchange acquired or received by him/her from the following –
The RFC account can be in the form of current or savings or term deposit. The funds in this account will be free from all restrictions regarding the utilisation of foreign currency balances, including any restrictions on investments in any form outside India. The balances in the NRE account and FCNR (B) account can be credited to the RFC account upon a change in the residential status of the Non-resident Indian (NRI) to that of a Resident.
A person resident in India can open the Resident Foreign Currency (Domestic) Account [RFC (D)] account in India out of the foreign exchange acquired him/her in the form of banknotes, currency notes and travellers’ cheque from overseas sources as follows:
RFC(D) account is a current non-interest earning account with no ceiling on balances in this account. The balances in this account can be credited to the NRE account, or FCNR(B) account at the account holders’ request or option upon the change in their residential status from resident to non-resident.
The sum total of the accruals during the present month in the account should be converted into Indian Rupees before the last day of the next month after adjusting for utilisation of the balances for forward commitments or approved purposes.
The firms and companies may open and maintain Diamond Dollar Account (DDA) with the authorised dealer banks, subject to the following conditions:
The sum total of the accruals during the present month in the DDA should be converted into Indian Rupees before the last day of the next month after adjusting for utilisation of the balances for forward commitments or approved purposes.
Yes. The Exchange Earners Foreign Currency (EEFC) Account and Resident Foreign Currency (RFC) Account can be opened with resident relatives either on a former or survivor basis. Relatives mean members of HUF, parents, spouse, son, daughter, daughter-in-law, son-in-law, brother and sister.
A resident individual can open a foreign currency account with a bank outside India in the following cases:
Yes. A person resident in India can maintain a foreign currency account outside India if he/she had opened it when he/she was resident outside India or inherited it from a person resident outside India.
A resident nominee of a foreign account has to close the account and bring back the proceeds to India through banking channels.
An individual can open foreign currency accounts at SBI, ICICI Bank, Axis Bank or HDFC bank. An individual can open a foreign currency account either online or through the local branch, or at one of the banks he/she has a current relationship with.