The Foreign Exchange Management Act, 1999 (FEMA) empowers the Reserve Bank of India (RBI) to frame regulations to prohibit, restrict and regulate the opening, holding and maintaining of foreign currency accounts and the limits up to which amounts can be held in such accounts by a person resident in India. These regulations are known as Foreign Exchange Management (Foreign currency accounts by a person resident in India) Regulations, 2015 notified under Notification No. FEMA 10 (R)/2015-RB of January 21, 2016, (FEMA 10 (R)) as amended from time to time.

As per the regulations, foreign Currency Accounts that can be held in India are as follows:

Particulars Exchange Earners Foreign Currency Account (EEFC) Resident Foreign Currency Account (RFC) Resident Foreign Currency Domestic Account (RFC (D)) Diamond Dollar Account Scheme (DDA)
Who can open the account Exchange Earners Individuals Individuals Firms and companies which comply with the eligibility criteria stipulated in the Foreign Trade Policy of the Government of India
Type of Account Current only Current/ savings/ term deposits Current only Current only
Interest Non-interest earning De-regulated (As decided by the AD bank) Non-interest earning Non-interest earning
Permitted Credits 1) 100% of foreign exchange received on account of export transactions.

2) Payments received for the purpose of counter trade

3) Advance remittance received by an exporter towards export of goods or services

4) Repayment of loans given to foreign importers

5) Disinvestment proceeds on conversion of ADR/ GDR

6) Professional earnings like director’s/ consultancy/ lecture fees, honorarium and similar other earnings received by a professional by rendering services in his individual capacity

7) Interest earned on the funds held in the account

8) Re-credit of unutilised foreign currency earlier withdrawn from the account

9) Payments received in foreign exchange by an Indian startup arising out of sales/ export made by the startup or its overseas subsidiaries

1) Foreign exchange received by him as super-annuation/ other monetary benefits from overseas employer

2) Foreign exchange realised on conversion of the assets which were acquired by him when he was a non-resident

3) Gift/ inheritance received from a person resident outside India and repatriated to India;

4) Foreign exchange acquired before the July 8, 1947 or any income arising on it held outside India with RBI permission

5) Foreign exchange received as earnings of LIC claims/ maturity/ surrendered value settled in forex from an Indian insurance company

6) Balances in Non Resident External (NRE)/ Foreign Currency Non Resident (Bank) (FCNR(B)) accounts on change in residential status

1) Foreign exchange received as payment/ service/ gift/ honorarium while on visit abroad or from a non-resident who is on a visit to India

2) Unspent amount of foreign exchange acquired from AD for travel abroad

3) Gift from close relative

4) Earning through export of goods/ services, royalty

5) Disinvestment proceed on conversion of shares into ADR/ GDR

6)  Foreign exchange received as earnings of LIC claims/ maturity/ surrendered value settled in forex from an Indian insurance company

Realisation of export proceeds and local sales (in USD) of rough, cut, polished diamonds; and pre and post shipment finance availed in USD can be credited to such account.
Permitted Debits 1)  Any permissible current or capital account transaction

2)  Cost of goods purchased

3)  Customs duty

4)  Trade related loans and advances

5)  To a person resident in India for supply of goods/ services

No restrictions on utilisation in/ outside India. Can be used for any permissible current/ capital account transactions. Payments for purchase of rough, cut and polished diamonds can be made from DDA account. Funds can also be transferred to rupee account of the exporter.

Apart from the above 4 types, Other Foreign Currency Accounts that can be opened in India are as follows:

  • By Indian agent of shipping or airline companies incorporated outside India.

Permitted Credits:

Freight or passage fare collections in India or from the principal outside India.

Permitted Debits:

Local expenses of the overseas company. 

  • By Ship-manning/ crew managing agencies

Permitted Credits

Inward remittances through normal banking channels from the overseas principal.

Permitted Debits

Expenses in connection with the management of the ships/ crew in the ordinary course of its business.

Note: The account will be maintained only during the validity period of the agreement.

  • By Project Offices of foreign companies (One foreign currency account per project in India can be opened)

Conditions to be satisfied:

  • Project Office is opened with due approval from RBI and the concerned Project Sanctioning Authority.
  • The contract under which the project has been sanctioned, specifically provides for payment in foreign currency.

Permitted Credits:

  • Foreign currency receipts from the Project Sanctioning Authority, and
  • Remittances from parent/ Group Company abroad or bilateral/ multilateral international financing agency.

Permitted Debits:

Payment of project related expenditure.

Note: The account shall be closed upon completion of the project.

  • By Organisers of international Seminars, Conferences, Conventions, etc.

Permitted Credits:

All inward remittances in foreign currency towards registration fees payable by overseas delegates, grant, sponsorship fees and donations, received from abroad, in connection with the conference, convention, etc

Permitted Debits:

  • Payment to foreign/ special invitees attending the conference, etc., on the specific invitation of the organisers, towards travel, hotel charges, etc.,
  • honorarium to foreign guest speakers;
  • Remittance towards refund of registration fees to foreign delegates and unutilised sponsorship/grant amount, if any;
  • Bank charges, if any;
  • Conversion of funds into rupees.

Note: The account shall be closed upon immediately, after the conference/event is over.

  • By an exporter who has undertaken a construction contract or a turnkey project outside India or who is exporting services or engineering goods from India on deferred payment terms


Permissible Credits:

All foreign exchange funds received by the unit.

Note: The account can be used for bona fide trade transactions between the unit and a person resident in/ outside India.

  • By an Indian company receiving FDI


  • The Indian investee company has impending foreign currency expenditure
  • The account is closed immediately after the requirements are completed or within six months from the date of opening of such account, whichever is earlier.

(The author of this article is a Practicing Company Secretary and can be reached at

Disclaimer: The contents of this article are solely for informational purpose. It does not constitute professional advice or a formal recommendation. No part of this article should be distributed or copied without express written permission of the author.


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