NRIs who have lived abroad continuously for at least a year can open resident foreign currency accounts with Indian banks upon their permanent return. For those who have returned from overseas in less than a year, the RBI must provide approval before they may create RFC accounts.

Without the RBI's consent, money kept in an RFC account can be freely transferred abroad. To make payments in India, it is also possible to withdraw money in rupees. The amount in an RFC account can be changed to an NRE/FCNR account if the account holder later travels overseas and becomes an NRI.

The interest on the deposit is tax-exempt as long as one retains the status of "Resident but not Ordinarily Resident." RFC deposits can be freely purchased with monies from NRE/FCNR accounts as well as other foreign currency funds brought in at the time of return. Additionally, any income from assets that one keeps overseas.