1 What Are They?

A person resident in India can hold money in foreign currency (not just Rupees) in certain special accounts — mainly to avoid repeated currency conversion and the costs that come with it. These accounts are opened with an Authorised Dealer (AD) bank in India.

• Governing rule: Foreign Exchange Management (Foreign Currency Accounts by a Person Resident in India) Regulations, 2015 — Notification FEMA 10(R).
• Detailed instructions are consolidated in RBI Master Direction No. 14 on Deposits and Accounts.
• Four main accounts held in India: EEFC, RFC, RFC(D) and the Diamond Dollar Account (DDA).

2 Master Comparison Table

If you learn just one thing, learn this. Almost every question comes from these rows.

3 EEFC Account

Exchange Earners’ Foreign Currency (EEFC) account lets foreign-exchange earners — including exporters, freelancers and consultants — keep their forex earnings in foreign currency instead of converting everything into Rupees.

• Open to all categories of forex earners resident in India (SEZ units have a separate facility).
• Held only as a current account; no interest is payable.
• 100% of foreign-exchange earnings can be credited.
• Monthly conversion rule: the net accruals in a calendar month must be converted to Rupees by the last day of the next month (after adjusting utilisation/forward commitments).
• Rupees can be withdrawn freely, but a Rupee withdrawal cannot be re-credited to the account.
• Balances can be hedged with forward contracts (which can be rolled over).

4 RFC Account

Resident Foreign Currency (RFC) account is mainly for returning NRIs — people who lived abroad, earned foreign exchange, and have now returned to become residents of India. It lets them keep their overseas savings in foreign currency.

Permitted Sources of Funds

• Pension / superannuation or other monetary benefits from an employer abroad.
• Foreign exchange realised on converting assets acquired while abroad [Sec 6(4)].
• Gift or inheritance from a person abroad.
• Proceeds of a life insurance policy settled in foreign currency.
• Balances in NRE / FCNR(B) accounts at the time of returning to India.

Key Features

• Can be held as a savings, current or term deposit account.
• Interest is payable.
• Funds are fully repatriable (can be sent abroad freely).
• No monthly conversion requirement — it is meant for parking savings.

5 RFC(D) Account

Resident Foreign Currency (Domestic) account lets ordinary resident individuals hold small amounts of foreign currency that they pick up legitimately — without keeping cash.

• Open to resident individuals only (firms, HUFs and proprietorships are not eligible).
• Current account, non-interest bearing.
• No ceiling on the balance.
• Permitted sources: forex acquired while on a visit abroad, as an honorarium or gift, as payment for services (not from business/employment), unspent foreign exchange, or a gift from a close relative.
• Monthly conversion rule applies (like EEFC and DDA).
• On becoming a non-resident, the balance can move to an NRE / FCNR(B) account.

6 Diamond Dollar Account (DDA)

A special account for the gems and jewellery trade. Firms and companies dealing in the import/export of rough or cut-and-polished diamonds and precious-metal jewellery can open it.

• Eligibility as per the Foreign Trade Policy — typically a track record of 2+ years and a minimum average annual turnover (₹3 crore or above), with up to 5 accounts permitted.
• Maintained only in US Dollars.
• Current account, no interest.
• Monthly conversion rule applies.
• Firms holding other foreign-currency accounts (except EEFC) are not eligible for a DDA.

7 Foreign Currency Accounts Held Abroad

A resident individual may also open a foreign-currency account outside India in certain cases:

• A student who has gone abroad for studies (treated as an account under LRS once they return).
• A resident on a visit abroad, for the duration of the stay.
• Under the Liberalised Remittance Scheme (LRS) for permitted transactions (up to USD 2,50,000 per financial year).

8 Easy Memory Hooks

9 Quick-Facts Cheat Sheet

10 Practice MCQs (Tap to Reveal Answers)

A mix of previously-asked and high-probability questions. Attempt first, then tap to check.