Difference Between NRE and RFC Account | NRE vs RFC Account

NRIs, who are willing to settle down back to India with foreign currency can manage RFC account. An 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 RFC account as listed in the following table which would help you choosing between the two:

Difference between NRE and RFC Account

Basis of DifferenceNon-resident Rupee Accounts(NRE) Non Resident Ordinary Rupee Accounts(NRO)
Type of Accounts Can be opened as Savings Bank Deposit,
Current Account, Term Deposit
Can be opened as Savings Bank Deposit,
Current Account, Term Deposit
PurposeOpened by NRIs who earn income abroad
and would like to remit it back to
Opened by NRIs who are returning to
India for settling in India.
Source of FundForeign funds or repatriable rupee funds
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 inIndian Rupee
Foreign Currency e.g. USD, GBP, EURO,
AUD, YEN, etc.
Minimum BalanceUsually, Savings : Rs. 10,000, Term /
Fixed Deposit: Rs. 50,000
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
1 Year to 3 Years
Rate of Interest 7% to 9% depending on amount, period and
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
residing in the same or different
Allowed. Joint holder can be any other
person eligible to open RFC account
Nomination Allowed. Nominees can be Indian
Allowed. Nominees can be Indian
RepatriabilityPrincipal as well as interest can be
entirely repatriable
Funds can be repatriated on genuine
Tax Exemptions Interest is tax-free in India. However,
it would attract tax in the country of
residence of the account holder.
Interest is taxable and Tax is deducted
at source(TDS) as per income tax rules.
Currency RiskCurrency risk is there, there will be a
loss in case rupee depreciates further
at time of maturity and repatriation.
No currency risk as the investment is
made in foreign currency and is
withdrawn in the same currency.
Loan against this accountPermitted
Not granted