Module: General Practice
Q46: "A person resident in India is strictly prohibited from maintaining a Foreign Currency Account (FCA) inside India."
Is this statement true?
✅ Correct Answer: B
While most domestic accounts are INR, FEMA allows specific exceptions for residents to hold foreign currency within India to facilitate trade and manage exchange risk.
Types of Accounts: EEFC (Exchange Earner’s Foreign Currency): Exporters can credit 100% of their foreign exchange earnings here.
However, funds must be converted to INR by the end of the succeeding month (as per recent rule tightening to prevent hoarding). RFC (Resident Foreign Currency): For returning NRIs who brought foreign exchange back with them.
They can hold it in foreign currency without conversion risk.
RFC (Domestic): For residents who earn foreign exchange via honorariums, gifts, or services while visiting abroad.
Types of Accounts: EEFC (Exchange Earner’s Foreign Currency): Exporters can credit 100% of their foreign exchange earnings here.
However, funds must be converted to INR by the end of the succeeding month (as per recent rule tightening to prevent hoarding). RFC (Resident Foreign Currency): For returning NRIs who brought foreign exchange back with them.
They can hold it in foreign currency without conversion risk.
RFC (Domestic): For residents who earn foreign exchange via honorariums, gifts, or services while visiting abroad.