Bank account options for returning NRIs

All the NRE (Non-Resident External) and NRO (Non-Resident Ordinary) accounts need to be converted to resident accounts or funds have to be transferred to a resident account on their return.  These accounts will be denominated in INR. Deposits like FCNR (Foreign Currency Non-Resident) can be maintained till the time of maturity. . ^[1] Thus, the best option for NRIs to transfer and maintain their funds in foreign currency, is by opening an RFC Savings account and / or an RFC fixed deposit:

Resident Foreign Currency (RFC) account:

Definition 

The resident account for a returning NRI to maintain their money from the time they were NRI in foreign currency is called a Resident Foreign Currency (RFC) account.

Eligibility for an RFC 

Any NRI who has returned to India for good is eligible to open an RFC account.
The account can he held jointly with resident relative^ as joint holder on ‘former or survivor’ basis. However, such resident Indian relative joint account holder cannot operate the account during the lifetime of the resident account holder.

Features of RFC

1. RFC accounts are used by returning Indians/NRIs to place their earnings when they return to the country^[1]
2. The money is held as foreign currency, so it is not open to the risk of foreign exchange fluctuation
3. The money can be transferred back to NRE/FCNR accounts if the NRI status is regained once again. The interest which is earned is fully repatriable ^[1]
4. Funds can be maintained in RFC Account with Standard Chartered Bank in USD, EUR, GBP, JPY & AUD

Credits Permitted^[2]

1. RFC account interests
2. Any transfers from the existing NRE/FCNR deposits
3. Eligible pension given by any employer outside India
4. Funds like rents, dividends, proceeds from any sale outside India, pension, etc.

Debits  Permitted^[2] 

1. Payments in India
2. Transfer of funds to NRE/FCNR accounts for regaining non-resident status
3. Normal bank transfers for investments outside of India

RFC Fixed Deposit 

An RFC FD is useful for returning NRIs who want to maintain their foreign money in fixed deposits and enjoy interests on them.

Features of RFC Fixed Deposit

1. High returns on funds in an RFC FD
2. No risk of foreign exchange fluctuation
3. If the account is under joint holding, the other joint holder should also be a returning NRI

The interests earned on RFC accounts and fixed deposits are subject to deduction of tax at source as applicable for resident Indian accounts

Since the advent of the RFC accounts, it has paved the way for easy reintegration of the returning NRIs.

References:

1. https://www.rbi.org.in/scripts/ECMUserChapterDetail.aspx?Id=391&CatID=13
2. https://www.rbi.org.in/scripts/ECMUserView.aspx?Id=52&CatID=10

*TnCs apply

**All products and services availability is subject to the Bank’s internal cross-border guidelines

^As per Section 2(77) Companies Act 2013

”relative”, with reference to any person, means anyone who is related to another, if–

• they are members of a Hindu Undivided Family;
• they are husband and wife; or
• one person is related to the other in such manner as may be prescribed;

The list of prescribed relatives is as follows:

A person shall be deemed to be the relative of another, if he or she is related to another in the following manner, namely:-

(1) Father: Provided that the term “Father” includes step-father.

(2) Mother: Provided that the term “Mother” includes the step-mother.

(3) Son: Provided that the term “Son” includes the step-son.

(4) Son’s wife.

(5) Daughter.

(6) Daughter’s husband.

(7) Brother: Provided that the term “Brother” includes the step-brother;

(8) Sister: Provided that the term “Sister” includes the step-sister