Difference Between FCNR and RFC Account | FCNR vs RFC Account

Foreign Currency Non Resident (FCNR) account is a term deposit account that can be maintained by NRIs and PIOs in foreign currency whereas RFC accounts (Resident Foreign Currency) are bank accounts that can be maintained by resident Indians in foreign currency.

There are many differences between NRE account and FCNR account as listed in the following table which would help you choosing between the two:

Difference between FCNR and RFC Account

Basis of DifferenceForeign Currency Non Resident (FCNR) Resident Foreign Currency (RFC)
Type of Accounts Can be opened as Term Deposit
Vs
Can be opened as Savings Bank Deposit,
Current Account, Term Deposit
PurposeOpened by NRIs to park their overseas
income in foreign currency in India
without converting them into rupees.
Vs
Opened by NRIs who are returning to
India for settling in India.
Source of FundForeign currency notes, Travellers
cheque, Currency Cheque, Wire Transfer
from overseas banks or Transfer funds
from an existing NRE account
Vs
Foreign exchange earnings through
employment or business, deposits held in
banks abroad, investments in foreign
currency or immovable properties
situated outside India, balances held in
his FCNR or NRE accounts
Maintained inForeign Currency e.g. USD, GBP, EURO,
AUD, YEN, etc.
Vs
Foreign Currency e.g. USD, GBP, EURO,
AUD, YEN, etc.
Minimum BalanceUsually, USD 1000, GBP 500, EUR 1000,
JPY 110000, AUD 1000, CAD 1000 - also
varies from bannk to bank
Vs
Usually, USD 1000, GBP 500, EUR 1000,
JPY 110000, AUD 1000, CAD 1000 - also
varies from bannk to bank
Period 1 Year to 5 Years
Vs
1 Year to 3 Years
Rate of Interest For USD - 1.5% to 2.75%, GBP- 0.5% to
1.5%, etc. depending on currency, period
and bank
Vs
For USD - 1.5% to 2.75%, GBP- 0.5% to
1.5%, etc. depending on currency, period
and bank
Joint Holding Allowed. Joint holders can be NRIs.
Vs
Allowed. Joint holder can be any other
person eligible to open RFC account
Nomination Allowed. Nominees can be Indian
Residents/NRIs.
Vs
Allowed. Nominees can be Indian
Residents/NRIs
RepatriabilityPrincipal as well as interest can be
entirely repatriable
Vs
Funds can be repatriated on genuine
grounds.
Tax Exemptions Interest is tax-free in India. However,
it would attract tax in the country of
residence of the account holder.
Vs
Interest is taxable and Tax is deducted
at source(TDS) as per income tax rules.
Currency RiskNo currency risk as the investment is
made in foreign currency and is
withdrawn in the same currency.
Vs
No currency risk as the investment is
made in foreign currency and is
withdrawn in the same currency.
Loan against this accountPermitted
Vs
Not granted