Resident Foreign Currency (RFC) Account

The RBI has issued a spate of notifications granting general permission to NRIs returning to India for, inter alia,

(a) holding / operating foreign exchange accounts outside India; and

(b) holding / operating foreign currency accounts within India, in accordance with RBI approved schemes.

The RBI had earlier introduced the Resident Foreign Currency Account Scheme in lieu of RIFEES vide notification dated 15th February, 1992. However, the RBI has withdrawn the 15th February, 1992 notification and has notified on 7th September, 1992 a new RFC Scheme, in pursuance of section 8(1) of FERA.

However, it may not be out of place to mention that the scheme is basically applicable to returning Indians who have been resident outside India for a continuous period of not less than one year. The account can be maintained in any permitted currency (Para 4.2 of ECM). The operations on these accounts are freely allowed, in terms of repatriation outside India. NRE / FCNR balances standing in the name of the Returning Indians at the time of his arrival in India can be credited to RFC account in India.

Interest on RFC account is exempt under section 10(15)(iv)(fa) of Income-tax Act.
 
 

Nomination

Banks can accept nominations by account holders in respect of their deposit accounts. The nomination can be made by the account holder or, as the case may be, by all the joint account holders together in respect of an account held by them with a bank of India. The nomination can be made only in respect of a deposit held in the individual capacity of the depositor and not in any representative capacity as a holder of an office or otherwise. The nomination has to be made in favour of only one individual. The nominee may be a minor, but, in that case, the account holder should, while making the nomination, appoint another individual (who is not a minor) to receive the amount of deposit on behalf of the nominee during his minority, in case of need. The nomination made can be varied or cancelled by the account holder any time during the currency of the account by filing an application in the prescribed form.

Nomination in case of non-resident accounts

The nomination facility is also available to holders of non-resident accounts. However, in case of deposits held in FCNR and NRE accounts, the deceased account holders’ nominees (who could also be residents of India) would not be automatically entitled to the right of repatriation of the funds acquired by them. Similarly, credit of the amount becoming payable to a nominee to his NRE / FCNR account requires prior permission of Reserve Bank of India. In such cases, the nominees are required to make separate applications to the Reserve Bank of India which would be considered in the light of the residential status of individual nominees and the relevant Exchange Control regulations. Utilisation of the funds in India by the nominees would not, however, need exchange control approval.
 

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