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RFC NRI Fixed Deposits – The Key Highlights

Since the banking needs of Non Resident Indians are rather different that those of resident Indians, the Reserve Bank of India has made provisions for different kinds of NRI accounts and fixed deposits. As an NRI, you can create fixed deposits out of the sums parked in your NRE and/or NRO accounts. If you wish to create an FD out of foreign currencies, you may even create a foreign currency fixed deposit or FCNR FD. However, most NRIs are unaware of Resident Foreign Currency savings accounts and the FDs they can create from those savings. Here are the lesser known facts.

What is RFC account and fixed deposit?

Resident Foreign Currency or RFC account is a special type of NRI accounts that resident Indians can maintain in foreign currency. These accounts are essentially designed for Non Resident Indians returning to India, who need to bring back the foreign currencies parked in their overseas current or savings bank accounts. The savings parked in these account can be used to create RFC NRI fixed deposits as well.

The RFC fixed deposit offers NRIs who’ve returned to their motherland, a great opportunity to earn higher returns on funds held in foreign currencies. Returning NRIs can simply create a fixed deposit out of their foreign earnings without worrying about the risks associated with foreign exchange conversion.

Highlights of the RFC fixed deposit

The key highlights of the RFC FD for NRIs can be summed up as under

  • You can open the FD irrespective of your NRI status – whether you are a POI or OCI.

  • You have the opportunity to earn higher interest rates as compared to domestic fixed deposits for creating FDs out of your foreign currency earnings.

  • You can continue maintaining your foreign earnings without having to immediately convert the foreign currency into INR.

  • Typically, most banks allow you to maintain foreign currency fixed deposits in 4 major international currencies namely the US Dollar, Great Britain Pound Sterling, the Euro and Japanese Yen.

  • You may transfer funds from the fixed deposit back into any NRI account you may be holding upon regaining your NRI status.

  • In case of joint NRI fixed deposits, all account holders need to be returning NRIs.

  • Both principal amount as well as interest earned on the FD is fully repatriable.

Opening the RFC fixed deposit

The process of opening this NRI fixed deposit is rather easy. Most banks offering NRI banking services make it possible for their customers to create the fixed deposit online, through the internet banking facility provided. However, if you do not have an NRI savings account, you may need to visit your bank to deposit the foreign currency in cash in order to create the deposit.

Whether you choose the online or offline channel for creating the FD, you’ll be required to fill a basic form and complete your KYC compliance in order to make the deposit. The bank hands over a physical fixed deposit certificate to those visiting the bank to create FDs whereas if you open the FD online you will be provided with an electronic deposit confirmation advice or an e-DCA as soon as your FD is created. 

Final word: NRIs planning to return to India for good should note that you need to check with your bank about the period for which you can continue maintaining the foreign currency account as well as your FD for NRIs since there are certain rules and regulations regarding the duration of foreign currency account maintenance. These regulations are laid down by the Reserve Bank of India and banks are obligated to follow them.

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Thursday, 23 January 2020

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