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

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

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

Only SEZ units engaged in gems and jewellery exports.

Any exporter of agricultural products.

Any resident individual with foreign exchange earnings.

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

70%

25%

50%

100%

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

Only if RBI grants specific approval

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

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

Only EUR and JPY are permitted

Only USD is permitted

Only for NRI proceeds

Any convertible foreign currency is permitted

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

Resident Foreign Currency (RFC) Account

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

Non-Resident External (NRE) Account

Exchange Earner’s Foreign Currency (EEFC) Account

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

Remittances from any local Indian company

Salary paid in India

Travellers’ cheques and gifts from relatives abroad

Interest earned on Rupee deposits

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

To allow residents to borrow in foreign currency

To fund overseas direct investments by Indian companies

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

To facilitate credit card transactions abroad

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

An account only for companies with foreign direct investment

A current account for any resident individual

A savings account for residents travelling abroad

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

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

At the discretion of the account holder

End of the current month

After six months

End of the succeeding calendar month

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