In plain words: residents can legally hold foreign currency in India — in the right account. Two accounts do this job, for two different situations.
RFC account (Resident Foreign Currency)
The RFC account is mainly for a returning NRI — someone who was a non-resident and has come back to India. It lets them hold their foreign-currency funds (brought back, or from NRE/FCNR on return) without converting to rupees.
- Holds foreign earnings and assets accumulated while abroad.
- Freely usable for permitted purposes and can be repatriated.
- Ideal for a returning resident who may go abroad again or has foreign commitments.
RFC(Domestic) account
The RFC(Domestic) account lets an ordinary resident hold foreign currency obtained from specified legitimate sources — for example, unspent foreign-travel exchange, honoraria or gifts received in foreign currency while abroad, or payments for services rendered abroad.
- A current account in foreign currency.
- Holds forex from permitted sources, to use later for permitted purposes.
- Saves you from surrendering and re-buying small amounts of forex.
Which one is for you
- Coming back to India after years abroad? → RFC.
- A resident with occasional legitimate forex to hold? → RFC(Domestic).
Points to keep in mind
Only eligible, lawful foreign currency can go into these accounts — keep proof of source. They are a legitimate convenience, not a way to park undisclosed forex.
Frequently asked questions
Can a resident hold dollars in India? Yes — in an RFC or RFC(Domestic) account, from eligible sources.
Who uses an RFC account? Mainly returning NRIs holding foreign funds.
Can I put leftover travel forex somewhere? Yes — an RFC(Domestic) account can hold it.
How Vakil Help Desk helps
Vakil Help Desk advises on FEMA compliance, NRI and foreign-national matters, foreign investment and compounding — and represents clients in ED FEMA proceedings. If you have a cross-border transaction or a FEMA question, we can help you get it right.
This article is for general legal awareness, not individual legal advice. FEMA rules, limits and forms are revised by the RBI and the Government from time to time, and the right treatment depends on your facts and the current position. Please consult a professional before acting on a cross-border transaction.