JAIIB · PPB · Unit 10Chapter Notes3–5 Marks Expected

Foreign Currency Accounts for Residents & Other Aspects

Principles & Practices of Banking | Unit 10 Chapter Notes

EEFC, RFC, RFC(D) and DDA accounts for residents — who can hold them, what credits/debits are permitted, and the critical monthly conversion rule. Plus specific category holders, accounts outside India, asset remittance for foreign nationals, property acquisition abroad, and FCRA 2010 — SBI mandatory account, 48-hour bank reporting, 5-year registration.

✓ By Bankopedia.co.in✓ Updated 2026✓ FCRA 2010 covered

📌 Why This Chapter Matters in JAIIB

Expect 3–5 questions. The EEFC monthly conversion rule, the four account types (EEFC/RFC/RFC(D)/DDA), and FCRA details are frequently tested. Critical numbers: EEFC = non-interest bearing, DDA = non-interest bearing USD account, FCRA SBI New Delhi Main Branch, 48-hour bank reporting, and 5-year registration validity.

Section 1

Four FC Account Types for Residents in India

FEMA permits persons resident in India to maintain accounts denominated in foreign currency — a step toward capital account convertibility. These provide a natural hedge on exchange risk and save conversion charges. Four account types are permitted:

🧠 Mnemonic — EEFC, RFC, RFC(D), DDA

EEFC — Exporters / FX earners

RFC — Returning NRIs

RFC(D) — Travel forex

DDA — Diamond traders (USD)

Critical Numbers at a Glance

EEFC interest

NIL

DDA interest

NIL

Monthly conversion by

Last day of succeeding month

DDA currency

USD only

RFC joint holder

'Former or survivor'

FDI company FC account

Close within 6 months

FCRA registration

5 years

Bank reporting deadline

48 hours

Section 2

Account Comparison — EEFC vs RFC vs RFC(D) vs DDA

Account	Full Name	Who Can Open	Account Type	Interest	Key Rule
EEFC	Exchange Earner's Foreign Currency Account	Resident persons with foreign exchange earnings	Current account only	NIL — non-interest bearing	Monthly conversion rule: balance converted to INR by last day of succeeding calendar month
RFC	Resident Foreign Currency Account	Returning NRIs/PIOs; residents with pension/superannuation from overseas employer	Current, Savings, or TD	As per bank's schedule	Balance freely utilisable outside India; NRE/FCNR(B) can be transferred here on return to India
RFC (D)	Resident Foreign Currency (Domestic) Account	Resident individuals who acquired FX during travel abroad	Current or Savings	As applicable	For unspent travel forex; honorarium/gifts received abroad; monthly conversion rule applies
DDA	Diamond Dollar Account	Diamond exporters/traders approved by Government of India	Current account (non-interest bearing)	NIL — non-interest bearing	USD denomination; rough, cut, polished diamonds; monthly conversion rule applies

Section 3

EEFC Account — Permitted Credits & Debits

A. Permitted Credits

→100% foreign exchange earnings by inward remittance through normal banking channels (other than loans or investments).
→Payments received for counter trade.
→Advance remittance received towards export of goods or services.
→Professional earnings (director's fees, consultancy fees, lecture fees, honorarium and similar) received by a professional rendering services in individual capacity.
→Interest earned on funds held in the account.
→Re-credit of unutilised foreign currency earlier withdrawn from the account.
→Disinvestment proceeds on conversion of shares held by the resident to ADRs/GDRs.
→Repayment of trade-related loans/advances (granted to the account holder's importer customer).
→Foreign exchange received by Indian startups from their overseas subsidiaries.

B. Permitted Debits

→Payment outside India for capital or current account transactions.
→Payment of customs duty as per Export Import Policy.
→Payment in FX for goods purchased from a 100% EOU or a unit in EPZ/STP/EHTP.
→Trade-related loans/advances by an exporter account holder to his importer customer outside India.
→Payment in foreign exchange to a person resident in India for supply of goods/services (including air fare and hotel expenditure).

C. Other Conditions

→Withdrawal in rupees is permitted — but the withdrawn amount CANNOT be re-credited.
→Claims settled in rupees by ECGC/insurance companies cannot be credited.
→NON-INTEREST BEARING account.
→Fund-based or non-fund-based credit facilities must NOT be granted against these balances.
→Can be used to repay packing credit advances (in any currency) up to actual exports made.
→Balance converted to INR by the last day of the succeeding calendar month after adjusting for utilisation and forward commitments.

Section 4

RFC Account — For Returning NRIs & Overseas Pension Recipients

A. Permitted Credits (Sources)

→Pension or superannuation benefits, or other monetary benefits from an overseas employer.
→Foreign exchange held outside India before July 8, 1947, or income arising/accruing thereon (with RBI permission).
→By converting assets acquired as a non-resident, or inherited from / gifted by a person resident outside India, and repatriated to India.
→Proceeds of LIC claims/maturity/surrendered value settled in forex from an Indian insurance company.

B. Debits & Other Conditions

→Balance can be FULLY UTILISED outside India, or converted to Indian Rupee at any time.
→Can have a resident relative as joint holder on 'former or survivor' basis — the joint holder CANNOT operate the account during the account holder's lifetime.
→Balances in NRE/FCNR(B) accounts can be credited to the RFC account when the NRI/PIO's residential status changes to 'Resident'.
→No mandatory monthly conversion rule (unlike EEFC, RFC(D), and DDA).

Section 5

RFC(D) Account & Diamond Dollar Account (DDA)

RFC (D) — Travel-Acquired Forex

For resident individuals who acquired foreign exchange in the form of currency notes, bank notes, or travellers' cheques from overseas sources.

Permitted Credit Sources:

→Payment received abroad for services (not arising from business in India) during a visit.
→Honorarium or gift while visiting abroad.
→Honorarium or gift/obligation payment from a non-resident visiting India.
→Gift from a relative.
→Unspent foreign exchange acquired from an authorised person for travel abroad.
→Disinvestment proceeds on conversion of shares to ADRs/GDRs.
→Life insurance policy claims/maturity/surrender settled in forex by an Indian insurer.

Debits: Balances can be used for any permitted current or capital account transactions.

DDA — Diamond Dollar Account

Exclusively for diamond exporters/traders approved by the Government of India. Operated in USD only.

Currency

USD only

Interest

NIL — non-interest bearing current account

Credits

Realisation of export proceeds and local sales (USD) of rough, cut, polished diamonds; pre and post shipment finance availed in USD

Debits

Payments for purchase of rough, cut and polished diamonds; transfer to rupee account

Monthly rule

Monthly conversion to INR applies (last day of succeeding calendar month)

⚠️ Monthly Conversion Rule — Which Accounts?

The monthly conversion rule applies to EEFC, RFC(D), and DDA — balance must be converted to INR on or before the last day of the succeeding calendar month (after adjusting for utilisation and forward commitments). RFC does NOT have this restriction — it can be held and used freely.

Section 6

Specific Categories Permitted to Hold FC Accounts in India

Beyond the four main account types, specific categories of persons/entities may hold foreign currency denominated accounts in India for their particular business requirements.

Indian agent of foreign shipping/airline companies

Can hold FC account for local expenses of the overseas company. Credits: freight/fare collections in India or from principal abroad.

Ship-manning / crew managing agencies

Non-interest bearing. Credits: only inward remittances from overseas principal. No credit facility. Only during validity of agreement. No EEFC on remittances received.

Project offices of foreign companies in India

Non-interest bearing. Only ONE FC account per project. Needs RBI/Project Authority approval. Contract must specifically provide for FX payment. Closed on project completion. In disputes: balance converted to INR and credited to special account.

Organisers of international seminars/conferences

Credits: registration fees, sponsorship, donations from abroad. Debits: travel/hotel for foreign invitees, refund of registration fees, bank charges, conversion to INR. Closed immediately after event. Other transactions need RBI approval.

Exporters (construction/turnkey/deferred payment terms)

Can hold FC account in India if approval for contract/project/export has been obtained and conditions complied with.

Units in Special Economic Zones (SEZ)

All foreign exchange received credited here. Can be used for bonafide trade with residents or non-residents. FX purchased in India against INR cannot be credited without RBI permission. Cannot lend to any resident outside SEZ.

Indian company receiving FDI

Can hold FC account with AD if impending FX expenditure exists. Account must be closed when need is over OR within 6 months, whichever is earlier.

Re-insurance and composite insurance brokers (IRDA registered)

Non-interest bearing FC account with AD for usual business transactions.

⚠️ High-Yield Exam Point — Status Change

For EEFC and RFC(D) accounts: if the account holder's status changes to non-resident, balances may be credited to NRE or FCNR(B) accounts.

Section 7

Permitted Foreign Currency Accounts Outside India

Business relatedFor normal business transactions — AD banks, branches of Indian banks abroad, Indian shipping/airline companies, IRDA-registered insurers, Indian firms/companies for foreign offices, exporters on deferred payment terms.

During visit abroadBalance must be repatriated to India on return.

Studies abroadMaintained during stay abroad. On returning to India, the account is deemed to be under LRS.

Exhibition / trade fairFor crediting sale proceeds of goods exhibited/sold.

LRS remittancesA resident remitting under LRS may hold a foreign account at the overseas bank.

Raising ECB / GDR / ADRIndian companies raising external commercial borrowings or depository receipts.

Indian startupsStartup with overseas subsidiary: for crediting earnings from exports/sales of the overseas entity.

Employed Persons Who Can Hold FC Accounts Abroad

For remitting/receiving salary payable to them in India:

→A foreign citizen on deputation to the office/subsidiary in India of a foreign company.
→An Indian citizen on deputation to the office/subsidiary in India of a foreign company.
→A foreign citizen employed with an Indian company in India.

Section 8

Remittance of Assets by Foreign Nationals & Acquiring Property Abroad

Remittance by Foreign Nationals (non-PIOs)

ADs are permitted to allow remittance of assets by a foreign national where:

→The person has retired from employment in India.
→The person is a non-resident widow/widower who inherited assets from the deceased Indian national spouse who was resident in India.
→The person inherited from a person referred to in Section 6(5) of FEMA.
→A foreign student in India has completed studies in India.

Modes of Acquiring Property Outside India by a Resident

(a)Property was acquired, held, or owned when resident outside India; or inherited from a person resident outside India.
(b)By way of gift or inheritance from a person as per (a); a person resident in India who held the property with RBI permission on/before July 8, 1947; or a person who acquired it as per FEMA.
(c)Purchase out of foreign exchange held in RFC account, or under LRS.
(d)Acquire jointly with a relative resident outside India — with no outflow of funds from India.

Section 9

Foreign Contribution (Regulation) Act 2010 — FCRA

FCRA regulates acceptance of foreign contributions and foreign hospitality by certain organisations (NGOs, political organisations, media houses, etc.). FCRA 2010 replaced the earlier 1976 Act on May 1, 2011. Amended in September 2020.

FCRA Key Numbers & Deadlines — Exam Critical

Registration validity5 yearsRenewal application must be filed within 6 months of expiry

Prior permissionSpecific purpose/amountValid only for the specific purpose and specific source

FCRA Account bankSBI New Delhi Main BranchMandatory — cannot receive foreign contribution at any other bank first

Bank reporting deadline48 hoursEvery transaction, irrespective of amount

Annual disclosure (website)9 monthsAfter closure of financial year (FY = 1 April–31 March)

Quarterly disclosure (website)15 daysAfter last day of the quarter in which foreign contribution received

FCRA replaced (year)May 1, 2011Replaced Foreign Contribution (Regulation) Act, 1976

Amendment Bill introducedSeptember 20, 2020Introduced in Lok Sabha

Persons Prohibited from Accepting Foreign Contribution

1.Candidate for election
2.Correspondent, columnist, cartoonist, editor, owner, printer or publisher of a registered newspaper
3.Public servant, Judge, Government servant or employee of any government-owned/controlled corporation
4.Member of any Legislature
5.Political party or office bearers thereof
6.Organisations of a political nature as specified by the Central Government
7.Associations or companies engaged in production/broadcast of audio/audio-visual news or current affairs programmes
8.Correspondent or columnist, cartoonist, editor, owner of such associations/companies

Foreign Hospitality — Persons Who Need Prior Government Permission

The following persons cannot accept foreign hospitality without prior permission of the Central Government:

→A member of a Legislature
→A Judge
→An office-bearer of a political party
→A Government servant
→An employee of any corporation or body owned or controlled by the Government

FCRA Account — Banking Channel Rules

→Foreign contribution MUST be received in an account designated as 'FCRA Account' at New Delhi Main Branch of State Bank of India (SBI) — effective September 2020.
→The person may open one or more accounts in other scheduled banks for utilising the foreign contribution transferred from the SBI FCRA Account.
→No funds other than foreign contribution shall be received or deposited in any such account.
→Reporting by banks: SBI NDMB or the scheduled bank where the FCRA account is held must report to the specified authority the amount, source, and manner of foreign remittance.
→Bank reporting deadline: 48 HOURS for every transaction in respect of receipt or utilisation of foreign contribution — irrespective of the amount.
→Banks must submit online reports through the software developed by Ministry of Home Affairs (MHA), Government of India.

Transfer & Utilisation Restrictions

→Transfer prohibited: A person who received foreign contribution cannot transfer it to any other person — unless that other person is also registered or has prior permission under FCRA.
→Utilisation: Foreign contribution must be used ONLY for the purpose for which it was received.
→No speculative use: Foreign contribution (or any income from it) cannot be used for speculative purposes.
→Administrative expense restriction: Use of foreign contribution for defraying administrative expenses is restricted.
→Suspension: A person whose certificate is suspended must not receive any foreign contribution without specific CG permission, and must utilise existing funds only with prior CG approval.
→Unutilised balance on cancellation: Vests with the banking authority until Central Government issues directions.

Disclosure Requirements (Rule 13)

Annual Disclosure (on official website)

→Audited statement of accounts — income & expenditure, receipt & payment, balance sheet.
→For every financial year beginning April 1.
→Deadline: within 9 months of closure of the financial year.

Quarterly Disclosure (on official website)

→Details of foreign contribution received in each quarter.
→Clearly indicates donor details, amount, and date of receipt.
→Deadline: within 15 days following the last day of the quarter.

Section 10

Chapter at a Glance — Key Facts

Rule / Feature	Key Figure	Context
EEFC interest	NIL	Non-interest bearing
DDA interest	NIL	Non-interest bearing current account
DDA currency	USD only	Diamond exporters/traders
Monthly conversion deadline	Last day of succeeding month	Applies to EEFC, RFC(D), DDA — NOT RFC
RFC joint holder	'Former or survivor'	Cannot operate during account holder's lifetime
FDI company FC account closure	Within 6 months	Or when need is over, whichever is earlier
Project office FC accounts	ONE per project	Non-interest bearing; closed on project completion
EEFC — no credit facility	Prohibited	Neither fund-based nor non-fund-based
FCRA replaced old act	May 1, 2011	Replaced FCRA 1976
FCRA Amendment Bill	September 20, 2020	Introduced in Lok Sabha
FCRA registration validity	5 years	Renewal application within 6 months of expiry
Bank reporting deadline (FCRA)	48 hours	Every transaction, irrespective of amount
Annual website disclosure	9 months	After closure of FY (1 April–31 March)
Quarterly website disclosure	15 days	After last day of the quarter
FCRA Account location	SBI New Delhi Main Branch	Mandatory; no other bank can receive FC first
Speculative use of FC	Prohibited	FC or any income from it cannot be used speculatively
Transfer of FC to another person	Prohibited	Unless other person also registered/has prior permission

Free — no credit card needed

Register free to read the full guide

All 25 chapters covered, plus a downloadable PDF study pack.

✓ Full guide — all 24 IIBF syllabus chapters
✓ PDF study pack — download and read offline
✓ Name screening, alert categories, STR writing guide
✓ 2025–26 regulatory updates included

Create free account →Sign in

Practice Test

Chapter 10 Mock Test — Coming Soon

MCQs on EEFC/RFC/RFC(D)/DDA accounts, FCRA mandatory SBI account, bank reporting timelines, and prohibited recipients — timed, graded, PRO.

Back to PPB Overview →

← Chapter 9: Operational Aspects of NRI Business|PPB Overview|JAIIB Exam Hub