Persons returning to India on or after 18th April 1992 after a continuous say abroad of one year and above enjoy the following facilities:
1. Retention of assets abroad: The returning Indians can—(a) maintain and operate their foreign currency accounts with banks abroad; (b) hold, transfer or dispose of their other foreign currency accounts such as shares, securities or investments in business, etc. and immovable properties held abroad, acquired by them without contravening FERA, 1973; and (c) hold, transfer or dispose of foreign exchange earned through employment, business or vacation abroad taken up or commenced while they were resident outside India. Further, they enjoy complete freedom for utilization of the above assets (eligible assets), incomes, sale proceeds of such assets for making any payments or fresh investments abroad without approval of Reserve Bank, provided they are met exclusively out of funds forming part of the eligible assets.
2. Resident Foreign Currency Accounts: The returning Indians may also opt to transfer into India the funds forming part of their eligible assets abroad, incomes/sale proceeds of such assets received subsequently and keep them in a special account designated the ‘Resident Foreign Currency’ (RFC) Account. RFC account-holders enjoy complete freedom in the matter of utilization of funds held in RFC accounts as in the case of assets retained abroad.
The rules governing the RFC account are summarized below:
1. Opening of account. The eligible person should apply to the bank in the prescribed format supported by required documents. One person can open one or more RFC accounts expressed in any permitted currency.
2. Joint accounts. The account can be held jointly in the names of eligible persons. Addition of names, other than eligible persons, is not permitted.
3. Type of account. RFC account may be maintained in the form of current, short term deposit account.
4. Operations–Credits. The account can be credited with
(a) Funds forming part of eligible assets and income/sale proceeds of eligible assets received from abroad through normal banking channel.
(b) Pensions and other monetary benefits arising out of employment taken up abroad before the eligible person returned to India.
(c) Interest earned on RFC account.
(d) Foreign currency notes/traveler cheques brought into India by the eligible person. If amount exceeds equivalent of US $ 10,000 it should have been declared on Currency Declaration Form.
(e) Transfers from other RFC account of the account holder.
(f) Balances in any NRE/FCNR account in the name of the eligible person at the time of his arrival in India.
(g)Any other amount specifically permitted by Reserve Bank.
5. Operations—Debits. (a) Any bona-fide remittance abroad through normal banking channel.
(b) Withdrawals/payments other than for remittances outside India, or for payments in foreign currency authorized to be made in India by Reserve Bank, shall be permitted only in rupees.
6. Rate of interest. As decided by bank on the basis on market rates.
7. Loan. No loan/overdraft permissible, directly or indirectly, against balances in RFC account.
8. Nomination. Available as in the case of resident rupee accounts.
9. Death of account holder. On the death of an RFC account holder, the balance in the account may be repatriated to the nominee/beneficiaries to the extent of his/their entitlement, on production of satisfactory proof of entitlement, if on the date of death of the account holder such nominee/beneficiaries are resident outside India. To the extent of any nominee/beneficiary is a person resident in India on the date of death of the account holder, on proof of entitlement, the amount may be paid to him in rupees.
