All AD Branches are permitted to open RFC accounts subject to compliance of instructions laid down in Foreign Exchange Management (Foreign Currency Accounts by a person resident in India) Regulations, 2000 – Notification No. FEMA 10/2000-RB dated 3rd May 2000 and subsequent amendments as well as other instructions issued by Central Office from time to time.
1. Under this scheme, persons of Indian nationality or origin, who having been resident outside India for a continuous period of not less than one year and have become persons resident in India on or after 18th April 1992 are eligible to open and maintain RFC accounts with branches in a freely convertible foreign currency. (For arriving at the period of continuous stay abroad of not less than one-year, short visits to India on personal grounds like meeting family members/relatives or on health grounds which do not indicate the person’s intention to stay in India for an indefinite period may be ignored).
2. Persons who return to India after a short assignment of less than one year abroad desiring to have RFC accounts should apply through the branch to RBI in form RFC. RFC accounts opened with the specific approval of RBI will be governed by the conditions stipulated by RBI while granting such approval.
3. Persons who returned to India prior to 18th April 1992 after having been resident outside India for a continuous period of not less than one year are also eligible to open RFC accounts if:
For the purpose of this Scheme, a person (not being a citizen of Pakistan or Bangladesh) shall be deemed to be of Indian origin, if:
1. The RFC account can be maintained in the form of term deposits or Savings Bank Account (without cheque book facility). The Savings Bank account will be without cheque book facility and the minimum balance is USD 500 to become eligible for RFC SB interest.
The period of term deposit in the form of RDP would be as under:
Beyond 12 months, the deposits can be accepted in multiples of 3 months only.
2. The eligible person should submit application in the form prescribed (Annexure I A), duly filled in and signed supported by required documents. Branches can open the account on being satisfied that the applicant is an eligible person and that funds being credited to the account represent remittances out of eligible assets.
3. Branches should have a separate Account Opening Register and suitable account numbers for SB and TD may be given as RFC-SB and RFC-TD etc. Branches may issue standard SB pass books for RFC-SB accounts after making necessary modifications. Standard Deposit Receipts may be issued for RFC term deposits.
4. Branches may at the option of RFC depositor obtain an undertaking for automatic renewal of deposits on due date.
The account may be held singly or jointly only in the names of eligible persons.
The account can be denominated in any of the following currencies: USD, GBP, JPY, EURO, CAD, and AUD FEDAI weekly average rates published by TREASURY (FOREIGN) every quarter will be used for accounting purposes (Notional rate)
Overdue RFC deposits cannot be renewed from back date. Such deposit can be renewed from prospective date only.
For the overdue period, branches are permitted to pay interest at the RFC SB rate (simple) appropriate to the currency of deposit, prevailing at the time of maturity or at the time of renewal, whichever is lower.
If such renewed deposits are closed before completion of 6 months, then the overdue interest paid on such renewed deposits should be recovered. No interest is payable on the deposit as it would not have run for the minimum period.
Recovery of swap charges has been dispensed with for the time being.
In case of premature closure, whether overdue interest has been paid or not, branches will pay interest at the rate applicable to the period for which the deposit has run, as prevailing on the date of opening/renewal less one percent penalty.
Under noted credit transactions may be allowed by branches in RFC accounts:
Remittance in convertible foreign currency from outside India through normal banking channels representing:
Pension or other monetary benefits received from outside India in convertible foreign currency, through normal banking channels, arising out of employment taken up outside India by the eligible person prior to his returning to India.
Interest earned on RFC account.
Foreign currency notes/travelers’ cheques brought into India by the eligible person, provided that where the amount tendered exceeds USD 10000 or its equivalent or where the value of foreign currency/bank notes exceeds USD 5000 or its equivalent they have been declared on the Currency Declaration Form.
Transfers from other RFC accounts of the account holder.
Balances in any NRE/FCNR Account (other than in NRE rupee accounts of persons resident in the erstwhile Bilateral Group countries which have been funded in non-convertible rupees) in the name of the eligible person standing to his credit at the time of his arrival in India. (No penalty would be payable for premature withdrawal of NRE/FCNR deposits in such cases).
Unutilized entitlements under any valid RIFEE permit or Reconversion facility granted by RBI.
Unspent foreign exchange surrendered by RFC account holders can also be accepted provided the branch is satisfied that the foreign exchange/currency concerned had in fact been released for travel etc. abroad by debit to the same RFC accounts and the amount of foreign exchange/currency is surrendered within the stipulated period as required under the Exchange Control Regulations.
(Eligible Assets — Assets acquired or held otherwise than in contravention of the Act by an eligible person, while he was resident outside India (non-resident), in the form of deposits in banks outside India, investments in foreign currency shares or securities or immovable properties situated outside India or investments in business etc. outside India and include foreign exchange earnings through employment, business or vocation outside India taken up or commenced by such person while he was resident outside India).
The funds in the account may be allowed to be freely utilized by the account holder for bonafide remittance outside India through normal banking channels including for investments abroad provided the cost of such investments and/or subsequent payments required there for are met out of RFC account.
Branches may permit withdrawals/payments from such accounts (other than for remittances) outside India, or for payments in foreign currency authorized to be made in India by RBI only in equivalent Indian rupees.
Rates of interest on deposits held under this scheme are advised by TREASURY (FOREIGN), Chennai monthly. For RFC-SB accounts, interest will be payable every quarter on the last working day of the quarter on product-wise calculations. For RFC- term deposit accounts for the period 12 months and above, interest will be compounded half yearly as in the case of FCNR B deposits. For term deposits of 6 months and above but less than 12 months, interest will be paid at a simple rate.
No loan/overdrafts shall be granted by branches against balances in RFC accounts.
The RFC accounts shall have the nomination facility as in the case of resident rupee account.
Funds held in RFC account may be freely remitted abroad or credited to fresh NRE/FCNR accounts in the event of the account holder becoming non-resident by virtue of his going abroad for employment etc.
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