Difference Between NRO and RFC Account | NRO vs RFC Account

An NRO (Non-Resident Ordinary) account is maintained and managed by resident Indian who becomes non resident indian whereas RFC accounts (Resident Foreign Currency) are bank accounts that can be maintained by resident Indians in foreign currency, who are willing to settle down back to India.

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

Difference between NRO and RFC Account

Basis of DifferenceNon-Resident Ordinary(NRO) Resident Foreign Currency (RFC)
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 in India
like income from rent from real estate
properties in their names or pension
Opened by NRIs who are returning to
India for settling in India.
Source of FundLocal rupee earnings. Existing domestic
account of the residents can be
converted to NRO account on their taking
up employment/ business/immigration
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 Month to 10 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 holder can be resident
Allowed. Joint holder can be any other
person eligible to open RFC account
Nomination Allowed. Nominees can be Indian
Allowed. Nominees can be Indian
RepatriabilityPrinciple is not repatriable but current
income and interest earning net of taxes
is repatriable.
Funds can be repatriated on genuine
Tax Exemptions Interest is taxable. Tax is deducted at
source(TDS) at 30% plus surcharge and
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