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Quick answer: when an NRI returns to India for good, RBI’s rules let the NRE balance either be redesignated as a resident account or moved to an RFC (Resident Foreign Currency) account, the NRO account can be redesignated as resident, and an FCNR(B) deposit can often run to maturity if the bank agrees. An RFC account holds foreign currency, is repatriable and has no restriction on use. Banks decide the details, so confirm each point with yours.
This is general information, not banking or tax advice. RBI directions are updated, and bank terms differ. Some points come from bank pages and summaries and should be confirmed with your authorised dealer bank and a chartered accountant. This guide is independent and has not been reviewed by a banking professional.
What happens to each account when you return
| Account | On return |
|---|---|
| NRE savings or deposit | The holder can designate it as a resident account, or transfer the funds to an RFC account, immediately on return, according to RBI’s Master Direction. |
| NRO | Can be designated as a resident account on return. |
| FCNR(B) deposit | The bank may, at its discretion and on your request, let it run to maturity at the contracted rate. It is not an automatic right. At maturity it moves to a resident rupee deposit or to an RFC account, at your option. |
See RBI’s Master Direction on deposits and accounts and the related Direction. Some blogs say NRE fixed deposits must be redesignated at once and others say they can run to maturity, so confirm the treatment of your deposit with the bank. See the guide to FCNR(B) and NRE fixed deposits for how FCNR(B) and NRE deposits differ.
What an RFC account is
- A foreign currency account for a resident individual who holds foreign exchange from specified sources.
- The account can be a current, savings or term deposit account. Interest is set by the bank, and a current account earns none.
- Balances are free from restrictions on use outside India. RBI’s FAQ describes use for any permissible current or capital account transaction, with no restrictions in or outside India.
- Banks typically offer a few major currencies, and the list is the bank’s own. One bank example offers US dollars and pounds sterling (see ICICI Bank).
Who can open one
The Master Direction lets a resident open an RFC account with an authorised dealer bank using foreign exchange from the listed sources, and lets NRE and FCNR(B) balances be credited to RFC when an NRI or person of Indian origin becomes resident. Bank pages describe the usual case as a person who lived abroad for at least a year before returning, and some ask for proof of earlier NRI status. That is a bank practice and an older RBI manual rule, so treat it as “typically” and confirm with your bank.
What can be credited
- Overseas pension, superannuation and other monetary benefits from a former employer.
- Proceeds of assets acquired while non resident and brought back.
- Gifts and inheritance from non residents.
- Insurance claim or maturity proceeds settled in foreign exchange.
- NRE and FCNR(B) balances on your change to resident status.
RFC and RFC(D) are different
RFC(D) is a separate current account for ordinary residents who hold specified foreign exchange earned or received in India, such as gifts, unspent travel foreign exchange, export earnings and insurance proceeds. It earns no interest. An RFC account can be a current, savings or term account and can earn interest (see the summary of RBI’s FAQ on TaxGuru).
Using and withdrawing the money
- Funds in an RFC account are repatriable and have no restriction on use outside India.
- A bank example says withdrawals in India are in rupees only, that a PAN is needed above Rs 50,000 and that a joint holder must also be RFC eligible. Confirm your bank’s rules.
Tax in outline
- NRE interest is tax free in India while you are a non resident for FEMA. Once you are resident for FEMA, the exemption stops, even if your income tax status is still RNOR. See the guide to RNOR status for returning NRIs.
- Interest on an RFC account is generally taxed under the resident rules, with tax deducted at source according to one bank (see Standard Chartered). RNOR status can exempt foreign income, but it does not exempt interest earned from an Indian bank, so confirm with a chartered accountant.
- RFC eligibility is not linked to RNOR status, according to a bank page.
Documents to expect
A bank example asks for a passport, a visa or work permit, address proof, proof of earlier NRI status, documents for persons of Indian origin where relevant and the application form (see ICICI Bank). Joint holder rules differ between banks, and one bank requires the other holder to be a returning NRI as well. Ask your bank for its list.
A checklist for the return
| When | What to do |
|---|---|
| Before you move | Ask your bank how it treats NRE, NRO and FCNR(B) on return and what documents it needs. |
| On arrival | Tell the bank in writing and keep a copy. |
| Soon after | Decide between redesignating NRE as resident and moving funds to an RFC account. |
| At FCNR(B) maturity | Choose a resident rupee deposit or an RFC account. |
| Each year | Check your income tax and FEMA statuses separately. |
See the guide to opening an NRI bank account for the account types while abroad and the guide to returning to Navi Mumbai for the relocation steps.
Frequently Asked Questions
What is an RFC account?
A Resident Foreign Currency account that lets a returning NRI or other eligible resident hold foreign exchange in India. It can be a current, savings or term deposit account, and the balance is free of restrictions on use outside India.
What happens to my NRE account when I return?
RBI’s Master Direction lets you designate it as a resident account or move the funds to an RFC account on return. Tell the bank in writing.
Can my FCNR(B) deposit run to maturity?
The bank may allow it at its discretion at the contracted rate, and at maturity it can move to a resident rupee deposit or an RFC account. It is not an automatic right.
What is the difference between RFC and RFC(D)?
RFC(D) is a current account for residents who hold specified foreign exchange earned or received in India, with no interest. RFC can be a current, savings or term account and can earn interest.
Is RFC interest taxable?
Generally yes under the resident rules. Confirm with a chartered accountant, since RNOR status does not exempt interest earned from an Indian bank.
Do I have to have lived abroad for a year to open an RFC account?
Banks typically ask for it, and an older RBI manual rule says so. Confirm with your bank.
Sources
| Point | Source |
|---|---|
| Accounts on return, RFC credits and use | RBI Master Direction and RBI Direction |
| RFC and RFC(D) | TaxGuru summary of the RBI FAQ |
| Bank examples | ICICI Bank and Standard Chartered |
Reviewed on 30 October 2026. The RBI Master Direction page may be an older version, so check the current text and your bank’s terms. This guide has not been reviewed by a banking professional.
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