Foreign Currency Accounts in India: All you need to know (2024)

Foreign currency accounts are an option for Indians who are looking to deposit overseas earnings or those who want to protect themselves against exchange rate fluctuations domestically.

Within foreign currency accounts in India, there are different types depending on if you are a domestic resident or a non-resident Indian. Plus, if you are earning in a foreign currency, for instance like an exporter, there are exchange-earners accounts to help mitigate foreign exchange fees.

With easier options like Wise to move money back and forth and not locked into term deposits, these accounts are becoming less relevant. Read on to learn more about foreign currency accounts in India and how they work.

How does a foreign currency account work?

A foreign currency account is an account offered in many banks across India. It is unique because rather than holding the balance in rupees, you hold the money in a foreign currency here in India. The foreign currencies available are going to be dependent on the bank that you use to open.

The account can be in the form of a savings account, current account or term deposit. And it can be held by any person who is a resident of India.¹

Resident foreign currency (domestic) account

A Resident foreign currency domestic account can be opened in the form of a non-interest bearing account. The RBI defines a resident as someone who is living in the country for over 182 days. This can include foreigners who are working or running a business in India.

You can use foreign currency from the following situations to open a resident foreign currency (domestic) account:

• Foreign currency you’ve gotten as payment or service while you were abroad or from a non-resident who is visiting India
• Foreign currency received as a gift or honorarium you’ve received from abroad or a visiting non-resident
• Any extra unspent foreign currencies you’ve gotten while traveling abroad
• Gifts from a relative
• Earnings through the export of goods/services
• Foreign currency you’ve received from life insurance claims, maturity or surrendered value.

If you fall into any of these categories, you can take the foreign currency to a registered dealer or bank and open an account for yourself or jointly with another resident.²

Foreign currency non-resident account

A non-resident who is an OCI or NRI can open a foreign currency non-resident account in India. The Foreign Currency Non-Resident account is only allowed to be a term deposit, versus a savings or current account for residents. The term deposit is required to be a minimum of 1 year and have a maximum time of 5 years.

You can credit the account through inward remittance from abroad into the currency of your choice in the foreign currency non-resident account. This can be from the income you’ve earned outside the country, including rent or pension income.³

A foreign currency non-resident account tends to have a few more options in terms of currencies to hold the funds in. Check with your preferred bank to find the one that fits best for you.

Exchange earners foreign currency account

An exchange-earners foreign currency account is a specialized account for those earning in foreign currencies especially through exports. It is a vehicle that allows companies and individuals to save on fees by not having to exchange their earnings into rupees.

The exchange earners foreign currency account is similar to the domestic foreign currency account in that there are not many options for holding currencies. Most are limited to USD, Euro, and Great British Pounds. It can only be held as a current account and can not gain interest.⁴

Which banks have foreign currency accounts?

Most of India’s major banks offer foreign currency accounts. But the currency that you can hold depends on the bank you go with. Here is a quick breakdown of banks and the currencies they offer

You can open an account online or through your local branch, or at one of the banks you have a current relationship with.

Remittance to foreign currency accounts

A foreign currency account can look like an interesting option for holding and moving foreign currencies in India. But as mentioned above, there are just a handful of currencies available to do so with. There are also new options like Wise to help you move money directly to a local bank account in over 59 currencies.

But what about moving money into the foreign currency account? If you aren’t using the right partner, the cost of moving money into one of these accounts can really start to add up. With transaction fees and weak exchange rates, a remittance can start to be costing you more than you think. The only way to get around this is to have an international payment partner that is clear, upfront and easy on your wallet.

Let Wise take care of your international payments

With Wise, you are in good hands whether you want to send money to your foreign currency accounts or from India to the world. You will always get the mid-market exchange rate with Wise.

There is no markup or hidden fees here. Then all you will have to pay is a small conversion fee, whether you are sending money out of India or bringing money in. You can use Wise to make transfers directly into bank accounts around the world. So you are no longer limited to just a handful of currencies or banks.

Wise ensures that your dollar or rupee is able to stretch as far as it can go, so your hard-earned money isn’t eaten up with fees. Take your international payments to the next level with Wise and save money when moving money in and out of India.

Sources used for this article:

1. How does an FCA account work
2. Resident foreign currency (domestic) account
3. Foreign Currency Non-Resident Account
4. Exchange Earners Foreign Currency Account

All sources checked as of 16 March, 2020