NRIs returning permanently after a continuous stay of minimum one-year abroad, can open resident foreign currency accounts with banks in India. Those who have returned after less than a year's stay abroad need to obtain permission from the RBI for opening RFC accounts.

Funds held in a RFC account can be remitted abroad freely without the RBI's approval. The funds can also be withdrawn in rupees to meet payments in India. If one subsequently goes abroad to become an NRI, the balance in their RFC account can be converted to an NRE/FCNR account.

As long as one maintains the status of 'Resident but not Ordinarily Resident', the interest on the deposit will be exempt from tax. The money held in NRE/FCNR accounts and other foreign exchange funds brought in at the time of return can be freely invested in RFC deposits. So also, any income from assets which one continue to maintain abroad.