Types and Features of FCY Accounts

Foreign Currency Accounts (FCY Accounts) are vital enablers of smooth cross-border trade for Indian exporters and businesses. Regulated by the Reserve Bank of India under FEMA, these accounts allow exporters to hold, manage, and utilise their foreign currency earnings effectively. For global investors, corporates, and bankers engaged with India, understanding FCY account types and their rules is key to managing trade transactions, foreign exchange exposures, and compliance. This quiz takes you through the essentials of FCY accounts in India, from basic concepts to specialised structures such as EEFC, RFC, and FCNR

Which of the following is a non-interest bearing account meant for retaining foreign exchange earnings in India?

Foreign Currency Non-Resident [FCNR (B)] Account

Resident Foreign Currency (RFC) Account

Exchange Earner’s Foreign Currency (EEFC) Account

Non-Resident External (NRE) Account

Can balances in NRE/FCNR (B) accounts be credited to an RFC Account when an NRI becomes resident again?

Only if the account holder is also a director in an Indian company

No, they must be closed immediately

Yes, balances may be credited to RFC Accounts upon change in residential status

Only if RBI grants specific approval

The maximum portion of foreign exchange export earnings allowed to be credited to EEFC account for general exporters is:

50%

70%

25%

100%

Which statement is correct about crediting proceeds to an EEFC account?

Only EUR and JPY are permitted

Only for NRI proceeds

Any convertible foreign currency is permitted

Only USD is permitted

A Resident Foreign Currency (Domestic) Account – RFC(D) allows retention of foreign exchange acquired in which of the following forms?

Travellers’ cheques and gifts from relatives abroad

Interest earned on Rupee deposits

Salary paid in India

Remittances from any local Indian company

Which of the following correctly describes an FCNR (B) Account?

A term deposit account in permissible foreign currency maintained by NRIs and PIOs

A current account for any resident individual

An account only for companies with foreign direct investment

A savings account for residents travelling abroad

What is the primary purpose of a Resident Foreign Currency (RFC) Account?

To facilitate credit card transactions abroad

To allow residents to borrow in foreign currency

To hold foreign exchange received as pension, assets converted from non-resident status, or gifts/inheritance from abroad

To fund overseas direct investments by Indian companies

Who is eligible to open a Diamond Dollar Account (DDA)?

Only SEZ units engaged in gems and jewellery exports.

Any exporter of agricultural products.

Any resident individual with foreign exchange earnings.

Firms and companies eligible under the Foreign Trade Policy dealing in diamonds.

Balances in an EEFC Account must be converted into Rupees by:

After six months

End of the succeeding calendar month

End of the current month

At the discretion of the account holder

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