Economics · Economy
Mr. Advait, a resident software consultant in Bengaluru, recently completed a three-month project for a client in Germany. He was paid five thousand Euros as a professional fee, which he received in cash during his stay in Berlin. Upon returning to India, he wants to keep this amount in foreign currency to pay for his daughter's upcoming college application fees in the United States. He approaches his bank to open a Resident Foreign Currency (Domestic) account. Which of the following is the most accurate advice for Mr. Advait regarding earning interest on this account type?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1He is not allowed to keep five thousand Euros in cash and must convert it to Rupees immediately.
- 2He can open the RFC (Domestic) account as a current account but it will not earn any interest.✓
- 3He should open an EEFC account instead to earn interest and retain the full amount in Euros.
- 4He can open an RFC (Domestic) account and will earn interest at the Euro LIBOR rate.
Correct answer
He can open the RFC (Domestic) account as a current account but it will not earn any interest.
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