Foreign Currency Bank Account by a Resident in India


RBI Master Direction 
Deposits and Accounts (Updated as on January 9, 2020)


Part I - Opening, holding and maintaining foreign currency accounts by a person resident in India

1. Introduction

1.1 The Foreign Exchange Management Act, 1999 (FEMA) empowers the Reserve Bank to frame regulations to prohibit, restrict and regulate the opening, holding and maintaining of foreign currency accounts and the limits up to which amounts can be held in such accounts by a person resident in India. These regulations are notified under 4Notification No. FEMA 10 (R)/2015-RB of January 21, 2016, (FEMA 10 (R)) as amended from time to time.

1.2 A person resident in India who held or maintained a Foreign Currency Account before the commencement of FEMA 10(R) with special or general permission of the Reserve Bank, can continue to maintain the account.

1.3 A person resident in India may maintain a foreign currency account outside India if he had maintained it when he was resident outside India or inherited it from a person resident outside India.

2. Definitions

Some key terms used in this part are given below:

2.1 ‘Authorised Dealer’ (AD) means a person authorised as an authorised dealer under sub-section (1) of section 10 of FEMA.

2.2 ‘Foreign Currency Account’ means an account held or maintained in currency other than the currency of India or Nepal or Bhutan.

2.3 ‘Relative’ is a person as defined in 5section 2(77) of the Companies Act, 2013.

62.4 A ‘Startup’ is an entity which complies with the conditions laid down in Notification No. GSR 180(E) dated February 17, 2016 issued by Department of Industrial Policy and Promotion, Ministry of Commerce and Industry, Government of India.

3. Foreign Currency Accounts that can be held in India

3.1 Exchange Earner's Foreign Currency (EEFC) Account – EEFC Account

A person resident in India may open an EEFC account with an AD in India as per the conditions stipulated in Schedule I to FEMA 10(R). The salient features of the scheme are:

1) Credits: The credits permitted to this account are:

  1. 100 percent of the foreign exchange earnings by way of inward remittance through normal banking channel, (other than loans or investments);

  2. payments received for the purpose of counter trade;

  3. advance remittance received by an exporter towards export of goods or services;

  4. professional earnings including director’s fees, consultancy fees, lecture fees, honorarium and similar other earnings received by a professional by rendering services in his individual capacity;

  5. interest earned on the funds held in the account;

  6. Re-credit of unutilised foreign currency earlier withdrawn from the account;

  7. repayment of trade related loans/ advances (which were granted to the account holder's importer customer out of balances held in the EEFC accounts);

  8. disinvestment proceeds received by the resident account holder on conversion of shares held by him to ADRs/ GDRs under the 7DR Scheme, 2014; and

  9. 8Payments received in foreign exchange by an Indian startup arising out of sales/ export made by the startup or its overseas subsidiaries.

2) Debits: The debits allowed in these accounts are:

  1. Payment outside India towards capital or current account transactions in accordance with the provisions of Foreign Exchange Management (Permissible Capital Account Transactions) Regulations, 2000 or Foreign Exchange Management (Current Account Transactions) Rules, 2000, respectively;

  2. payment in foreign exchange towards cost of goods purchased from a 100 percent Export Oriented Unit or a Unit in an Export Processing Zone/ Software Technology Park/ Electronic Hardware Technology Park;

  3. payment of customs duty in accordance with the provisions of Export Import Policy;

  4. trade related loans/ advances, by an exporter account holder to his importer customer outside India, subject to complying the provisions of FEMA and the rules/ regulations made thereunder;

  5. payment in foreign exchange to a person resident in India for supply of goods/ services including payments for air fare and hotel expenditure

3) Withdrawal in rupees are permitted from this account, provided the amount so withdrawn cannot be re-credited to the account.

4) The account will be in the form of a non-interest bearing account.

5) The claims settled in rupees by ECGC/ insurance companies should not be construed as export realisation in foreign exchange and the claim amount will not be an eligible credit to the EEFC account.

6) The sum total of the accruals in the account during a calendar month should be converted into Rupees on or before the last day of the succeeding calendar month after adjusting for utilization of the balances for approved purposes or forward commitments.

7) Fund-based/ non-fund based credit facilities should not be granted against the balances held in EEFC Accounts.

8) Exporters can repay packing credit advances, whether availed of in Rupee or in foreign currency, from balances in their EEFC account to the extent exports have actually taken place.

9) Balances held in the account may be credited to NRE/ FCNR (B) Accounts, at the option/ request of the account holders consequent upon change of their residential status from resident to non-resident.

3.2 Resident Foreign Currency (RFC) Account – RFC Account

1) A person resident in India is permitted to open a RFC account with an AD bank in India out of foreign exchange received or acquired by him:

  1. as pension or superannuation benefits or other monetary benefits from his overseas employer;

  2. by converting assets which were acquired by him when he was a non-resident or inherited from or gifted by a person resident outside India and repatriated to India;

  3. before July 8, 1947 or any income arising or accruing thereon which is held outside India in pursuance of a general or special permission granted by the Reserve Bank;

  4. received as proceeds of LIC claims/ maturity/ surrendered value settled in forex from an Indian insurance company permitted to undertake life insurance business by the Insurance Regulatory and Development Authority.

2) The balances in the RFC account are free from all restrictions regarding utilisation of foreign currency balances outside India.

3) Such accounts can be 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 life time of the resident account holder.

4) The balances in the Non-Resident External (NRE) Account and Foreign Currency Bank [FCNR (B)] Account can be credited to the RFC account when the residential status of the non-resident Indian (NRI) 9 or person of Indian origin (PIO) changes to that of a Resident.

3.3 Resident Foreign Currency (Domestic) Account – RFC (D) Account

1) A resident individual may open an RFC(D) account to retain in a bank account in India the foreign exchange acquired in the form of currency notes, bank notes and travellers cheques from overseas sources such as:

  1. payment while on a visit abroad for services not arising from any business or anything done in India;

  2. honorarium or gift or for services rendered or in settlement of any lawful obligation from any person not resident in India and who is on a visit to India;

  3. honorarium or gift while on a visit to any place outside India;

  4. gift from a relative;

  5. unspent foreign exchange acquired from an authorised person for travel abroad;

  6. representing the disinvestment proceeds received by the resident account holder on conversion of shares held by him to ADRs/ GDRs under the 10DR Scheme, 2014;

  7. by way of earnings received as the proceeds of life insurance policy claims/ maturity/ surrender values settled in foreign currency from an insurance company in India permitted to undertake life insurance business by the Insurance Regulatory and Development Authority

2) This facility is in addition to that provided under RBI Notification No.FEMA.11(R)/ 2015-RB dated December 29, 2015, as amended from time to time.

3) The sum total of the accruals in the account during a calendar month should be converted into Rupees on or before the last day of the succeeding calendar month after adjusting for utilization of the balances for approved purposes or forward commitments.

4) Balances in the account can be used for any current or capital account transactions in accordance with the provisions of the Foreign Exchange Management (Current Account Transactions) Rules, 2000 or the Foreign Exchange Management (Permissible Capital Account Transactions) Regulations, 2000, respectively.

5) Balances may be credited to NRE/ FCNR (B) Accounts, at the option/ request of the account holders consequent upon change of their residential status from resident to non-resident.

3.4 Diamond Dollar Account (DDA) Scheme – DDA Account

Firms and companies which comply with the eligibility criteria stipulated in the Foreign Trade Policy of the Government of India may open DDA accounts, details of which are laid down in Schedule II of FEMA 10(R), as amended from time to time, with an AD in India. The salient features of the Scheme are:

  1. Realisation of export proceeds and local sales (in USD) of rough, cut, polished diamonds; and pre and post shipment finance availed in USD can be credited to such account.

  2. Payments for purchase of rough, cut and polished diamonds can be made from DDA account. Funds can also be transferred to rupee account of the exporter.

  3. The account should be maintained in the form of a non-interest bearing current account.

  4. The sum total of the accruals in the account during a calendar month should be converted into Rupees on or before the last day of the succeeding calendar month after adjusting for utilization of the balances for approved purposes or forward commitments.

3.5 Indian agent of shipping or airline companies incorporated outside India can maintain foreign currency account in India for meeting the local expenses of the overseas company. The credits permitted to such accounts are freight or passage fare collections in India or from his principal outside India.

3.6 Ship-manning/ crew managing agencies in India may maintain non-interest bearing foreign currency account in India for the purpose of undertaking transactions in the ordinary course of their business, as detailed:

  1. Credits: Only by way of inward remittances through normal banking channels from the overseas principal.

  2. Debits: Towards various expenses in connection with the management of the ships/ crew in the ordinary course of its business.

  3. No credit facility (fund-based or non-fund based) should be granted against security of funds held in the account.

  4. The bank should meet the prescribed Reserve Requirements in respect of such accounts.

  5. No EEFC facility should be allowed in respect of the remittances received in the account.

  6. The account will be maintained only during the validity period of the agreement.

3.7 Project Offices of foreign companies can open non-interest bearing one or more foreign currency accounts in India for the project to be executed in India. Such accounts will be subject to the following conditions:

1) The Project Office has been established in India, with the general/ specific permission of Reserve Bank, having the requisite approval from the concerned Project Sanctioning Authority,

2) The contract under which the project has been sanctioned, specifically provides for payment in foreign currency,

3) Each Project has only one Foreign Currency Account.

4) Debits:

a. Payment of project related expenditure.

5) Credits:

a. Foreign currency receipts from the Project Sanctioning Authority, and

b. Remittances from parent/ Group Company abroad or bilateral/ multilateral international financing agency.

6) The Foreign Currency account should be closed at the completion of the Project.

7) Inter-project transfer of funds will be permitted with the prior permission of the Regional Office of the Reserve Bank under whose jurisdiction the project office is situated.

8) In case of disputes between the Project Office and the project sanctioning authority or other Government/ Non-Government agencies etc., the balance held in such account shall be converted into INR and credited to a special account which shall be dealt with as per the settlement of the dispute.

3.8 Organisers of international Seminars, Conferences, Conventions, etc. – can open temporary foreign currency accounts in India subject to the following conditions:

  1. Credits: All inward remittances in foreign currency towards registration fees payable by overseas delegates, grant, sponsorship fees and donations, received from abroad, in connection with the conference, convention, etc

  2. Debits: (i) Payment to foreign/ special invitees attending the conference, etc., on the specific invitation of the organisers, towards travel, hotel charges, etc., and honorarium to foreign guest speakers; (ii) Remittance towards refund of registration fees to foreign delegates and unutilised sponsorship/grant amount, if any; (iii) Bank charges, if any; (iv) Conversion of funds into rupees.

  3. All other credits/ debits would require the prior approval of the Reserve Bank.

  4. The account should be closed immediately, after the conference/event is over.

3.9 An exporter who has undertaken a construction contract or a turnkey project outside India or who is exporting services or engineering goods from India on deferred payment terms may open, hold and maintain a Foreign Currency Account with a bank in India, provided that approval as required under the Foreign Exchange Management (Export of goods and services) Regulations, 2015, as amended from time to time has been obtained for undertaking the contract/ project/ export of goods or services, and the terms and conditions stipulated in the letter of approval have been duly complied with.

3.10 A unit located in a Special Economic Zone (SEZ) - may open hold and maintain a foreign currency account with an authorized dealer in India to credit all foreign exchange funds received by the unit.

  1. The account can be used for bona fide trade transactions between the unit and a person resident in/ outside India.

  2. Foreign exchange purchased in India against rupees cannot be credited to the account without prior permission from the Reserve Bank.

  3. The balances in the accounts are from the restrictions imposed under Rule 5, of Foreign Exchange Management (Current Account Transaction) Rules, as amended from time to time, except for the use of the balances for gift etc.

  4. The funds held in these accounts cannot be lent or made available to any person or entity resident in India not being a unit in Special Economic Zones.

113.11 An Indian company receiving foreign investment under FDI route in terms of 12Foreign Exchange Management (Non-debt Instruments) Rules, 2019 dated October 17, 2019, as amended from time to time, may open and maintain a foreign currency account with an Authorized Dealer in India provided the Indian investee company has impending foreign currency expenditure and the account is closed immediately after the requirements are completed or within six months from the date of opening of such account, whichever is earlier.

133.12 Re-insurance and Composite Insurance brokers registered with Insurance Regulatory and Development Authority of India (IRDA) may open and maintain non-interest bearing foreign currency accounts with an AD bank in India for the purpose of undertaking transactions in the ordinary course of their business.

4. Foreign Currency Accounts that can be held outside India

4.1 The following persons can open a foreign currency account with a bank outside India for carrying on normal business and incidental transactions.

  1. An authorized dealer in India with its branch/ head office/ correspondent outside India.

  2. A branch outside India of a bank incorporated in India.

  3. An Indian shipping or airline company.

  4. 14Insurance/ reinsurance companies registered with Insurance Regulatory and Development Authority of India (IRDA) to carry out insurance/ reinsurance business.

  5. An India firm/ company/ body corporate in the name of its foreign office/ branch or its representative posted outside India.

  6. An exporter who is exporting services and engineering goods on deferred payment terms or executing a turnkey project or a construction contract abroad.

4.2 A person resident in India who has gone abroad for studies may open a foreign currency account with a bank outside India during his stay abroad. All credits to the account from India should be made in accordance with FEMA and the rules and regulations made thereunder. 15On the student’s return to India after completion of studies, the account will be deemed to have been opened under the Liberalised Remittance Scheme.

4.3 A person resident in India who is on a visit to a foreign country may open a foreign currency account with a bank outside India during his stay abroad. The balance in the account should be repatriated to India on return of the account holder to India.

4.4 A person going abroad to participate in an exhibition/ trade fair may open a foreign currency account with a bank outside India for crediting the sale proceeds of goods. The balance should be repatriated to India within one month from the date of closure of the exhibition/ trade fair.

4.5 The following persons can open a foreign currency account outside India for remitting/ receiving their entire salary payable to him in India.

a) A foreign citizen resident in India, 16being an employee of a foreign company, on deputation to the office/ branch/ subsidiary/ joint venture/ group company in India;

b) An Indian citizen, being an employee of a foreign company, on deputation to the office/ branch/ subsidiary/ joint venture/ group company in India

c) A foreign citizen resident in India employed with an Indian company;

4.6 An Indian Party [as defined in Foreign Exchange Management (Transfer or Issue of any Foreign Security) Regulations, 2004, as amended from time to time] may open a foreign currency account abroad for making overseas direct investment provided the oversees regulator mandates opening of such an account.

4.7 A resident individual can open a foreign currency account with a bank outside India for the purpose of sending remittances under the Liberalized Remittance Scheme.

4.8 Subject to compliance with the conditions in regard to raising of External Commercial Borrowings (ECB) or raising of resources through American Depository Receipts (ADRs) or Global Depository Receipts (GDRs), the funds so raised may, pending their utilisation or repatriation to India, be held in deposits in foreign currency accounts with a bank outside India.

174.9 Indian startup, having an overseas subsidiary, may open a foreign currency account with a bank outside India for the purpose of crediting to the account the foreign exchange earnings out of exports/ sales made by the said startup or its overseas subsidiary. The balances held in such accounts, to the extent they represent exports from India, shall be repatriated to India within the period prescribed for realization of exports, in Foreign Exchange Management (Export of Goods and Services) Regulations, 2015 dated January 12, 2016, as amended from time to time.

5. Miscellaneous

5.1 Unless otherwise specifically stated, a foreign currency account maintained by a person resident in India with an authorized dealer in India under the Foreign Exchange Management (Foreign Currency Accounts by a person resident in India) Regulations, 2015, dated January 21, 2016 as amended from time to time, may be opened, held and maintained in the form of current or savings or term deposit account in cases where the account holder is an individual, and in the form of current account or term deposit account in all other cases.

5.2 The account can be held singly or jointly in the name of person eligible to open, hold and maintain such account.

5.3 On the death of a foreign currency account holder -

  1. the authorised dealer with whom the account is held or maintained may remit to a nominee being a person resident outside India, funds to the extent of his share or entitlement from the account of the deceased account holder;

  2. a nominee being a person resident in India, who is desirous of remitting funds outside India out of his share for meeting the liabilities abroad of the deceased, may apply to the Reserve Bank for such remittance.

  3. 18A resident nominee of an account held outside India in accordance with Regulation 5 of Foreign Exchange Management (Foreign Currency Accounts by a person resident in India) Regulations, 2015, dated January 21, 2016, (viz., paragraph 4 of Part I of this Master Direction) has to close the account and bring back the proceeds to India through banking channels.