If you work with overseas clients or sell to customers outside India, you’ve probably felt the pressure to handle cross-border payments more efficiently. With India’s exports and global online sales growing year after year, you now need smoother ways to receive and manage international earnings.
A USD account in India helps you do exactly that. Instead of forcing every dollar payment into an immediate rupee conversion, this type of foreign currency account lets you hold and use funds in USD. This means you don’t lose money to unfavourable exchange rates at the time the payment arrives. It also reduces the delays you usually face in international transfers, especially when payments move through multiple intermediary banks.
Read on this guide to learn how a USD account works, why it’s useful and how you can open one in India.
Key takeaways
- A USD account in India allows you to receive and hold dollar payments without immediate conversion to INR, providing you with better control over exchange rates.
- It helps you avoid double conversion fees when earning in USD and paying for global tools or services in the same currency.
- A dedicated USD account makes international invoicing, payments, and accounting simpler and more organised.
- For businesses, the EEFC account is the primary USD account, while RFC accounts are meant only for returning NRIs.
What is a USD Account in India?
A USD account in India is a bank account that operates in US Dollars instead of Indian Rupees. It allows you to receive, hold, and send money in USD without converting it to INR immediately.
If you work with international clients or sell to customers in the US, you can receive their payments directly in dollars. The money stays in USD until you decide to convert it. This helps you avoid unnecessary conversion losses and gives you control over when to exchange your earnings.
Think of it as a separate wallet just for your US Dollar earnings. It protects your money from daily currency fluctuations and lets you convert it to INR when the rate works in your favour.
A USD account is mainly meant for business-related transactions—such as receiving export payments, SaaS subscriptions, or freelance fees. It’s not designed for personal savings or parking foreign currency without a valid business purpose.
Why Do Indian Businesses Need a USD Account?
Avoid High Currency Conversion Fees (The #1 Benefit)
Every time money moves between USD and INR, you lose a little to the “spread”—the difference between the bank’s buy and sell rates. Banks earn from this gap, and you end up losing money twice:
- First, when a client pays you in USD and the bank converts it to INR.
- Again, when you pay for a global service (like a SaaS tool) and your bank converts INR back to USD.
A USD account helps you avoid this double hit. You hold your earnings in USD and use them for USD expenses without repeated conversions.
Hedge Against INR/USD Currency Fluctuation
The INR–USD exchange rate changes every day, and even small movements can affect your actual earnings. If your payments get converted to INR immediately, you have no control over the rate you receive.
A USD account lets you hold your money in dollars, watch the exchange rate, and convert it only when the rate works in your favour. This control helps you maximise your revenue, especially during periods when the rupee weakens against the dollar.
Simplify International Invoicing and Payments
Most global clients are used to paying into a USD account. When you include a USD account number on your invoice, it removes friction and speeds up payments. It also becomes easier to pay for international tools—like SaaS subscriptions, cloud software, and marketing services—directly in USD, without worrying about extra conversion charges.
Pro Tip: Use a single USD account for all global tools and software subscriptions. It reduces clutter, avoids double conversions, and gives you a clear view of your actual dollar expenses.
Streamline Accounting and Reconciliation
A dedicated USD account keeps all your foreign earnings and expenses in one place, making it easier for your accounting team or CA to track and verify transactions. They don’t have to sort through mixed INR and USD entries, chase conversion timestamps, or reconcile multiple statements.
With a clear separation of currencies, your books stay cleaner, audits become smoother, and your financial reports reflect your global income more accurately.
Types of USD Accounts Available in India
Exchange Earner’s Foreign Currency (EEFC) Account
An EEFC account is the main USD account available for Indian businesses that receive payments from abroad. It works like a current account, not a savings account, so you don’t earn interest on the money you keep in it.
You can receive your export earnings directly in USD and hold them without immediate conversion to INR. However, as per the Reserve Bank of India’s Circular No. A.P. (DIR Series) 12 dated 31 July 2012, the balance you hold in an EEFC account at the end of any month must mostly be converted into Indian Rupees by the bank on the last working day of the following month. This means you can hold USD only for a limited time, which is important if you’re planning to wait for a better exchange rate.
Resident Foreign Currency (RFC) Account
An RFC account is different from an EEFC account. It is mainly for NRIs who return to India and want to keep the foreign currency savings they earned while living abroad, such as income from pensions or retirement benefits.
This account is not meant for businesses that earn from exports, SaaS clients, or freelance projects. In simple terms, if you run a business in India, an RFC account is not relevant for you.
Comparison Table: EEFC vs RFC
| Feature | EEFC Account | RFC Account |
| Purpose | Hold export earnings in USD | Hold past foreign savings of returning NRIs |
| Who can open | Indian businesses and freelancers | Individuals |
| Account Type | Current account | Current/ savings/ term deposits |
| Interest Earned | No | Yes (varies by bank) |
| RBI Conversion Rule | Must convert most funds by the last day of the next month | No such rule |
| Suitable for Indian businesses | Yes | No |
Explore Razorpay’s Global Payment Solutions
How to open a USD Account in India?
1. Choose the Type of USD Account
Start by deciding which USD account suits your needs. Most Indian businesses, exporters, freelancers, and SaaS companies choose an EEFC account, as it allows them to receive and hold export earnings directly in USD without immediate conversion to INR.
2. Select a Bank or Payment Provider
Next, choose a bank or payment provider that supports USD transactions. Compare them based on transfer fees, supported currencies, remittance speed, customer support, and online banking features. Selecting the right provider ensures smoother and more cost-efficient international payments.
3. Submit KYC and Business Documents
Once you pick a provider, you’ll need to complete the KYC process. Banks typically ask for documents such as your PAN, Aadhaar or passport, business registration papers, GST certificate (if applicable), Import Export Code (IEC) for exporters, and recent invoices or client contracts. These documents help the bank verify your business activity and eligibility for a USD account.
4. Open the Account and Enable USD Receipts
After the bank verifies your information, your USD account will be opened. You can then request the bank to activate inward USD remittances. You’ll receive your account details—such as SWIFT/BIC code, bank address, and beneficiary information—which you can share with your overseas clients.
5. Start Receiving and Managing USD Funds
Once everything is activated, you can start receiving payments directly in USD. You can hold the funds in your account or convert them to INR when the exchange rate is favourable. Most providers also give you online access, allowing you to track balances, download statements, and manage your USD earnings easily.
Limitations of Traditional USD Accounts
High Setup and Maintenance Fees
Most traditional USD accounts come with high minimum balance requirements and monthly maintenance charges. Banks may also add hidden fees for incoming wires, outward remittances, or compliance checks—making it expensive for small businesses or freelancers to maintain.
Complex Documentation and Long Wait Times
Opening a dollar account through a bank usually involves heavy paperwork, multiple branch visits, and long verification timelines. For many businesses, this delays their ability to start collecting overseas payments, which directly affects cash flow.
Mandatory Conversion Timelines
Under RBI rules, you cannot hold your USD earnings forever. Most of the balance must be converted to INR by the last working day of the following month. This takes away your ability to plan for better exchange rates and limits the use of the account for genuine currency management.
Clunky UI/UX for International Transfers
Most banking portals make international transfers harder than they should be. You often deal with too many steps, unclear fees, confusing purpose-code forms, and limited mobile access. There’s usually no real-time tracking, so you can’t see where a payment is stuck, and invoices don’t auto-match with incoming transfers, forcing your team to reconcile everything manually.
Poor Support for Multiple Foreign Currencies
Many traditional banks focus mainly on USD and offer limited support for other currencies like EUR, GBP, or AUD. If you receive payments in different currencies, you may need separate accounts, separate documentation, and separate fee structures, which increases complexity and operational effort.
When you put these issues together, it becomes clear why businesses look for a better way to manage international payments. This is where Razorpay steps in as a smarter, simpler, and more flexible alternative designed for modern global businesses.
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Lower Collection Costs
Traditional USD accounts come with maintenance fees and hidden deductions. Razorpay helps businesses reduce these costs by offering zero forex markup and transparent pricing, so you always receive the amount you expect — without losing earnings to bank spreads.
Open Global Accounts Digitally
Instead of paperwork and long verification cycles, Razorpay allows you to open US, UK, and Europe-based collection accounts in seconds — without requiring a local presence. This makes it easier for global customers to pay you like a local business, helping you collect faster and improve cash flow.
Simplified Compliance and Tracking
Razorpay automates key compliance elements like Digital FIRC, which can be downloaded in one click. Instead of manually tracking documents and purpose codes, businesses get a clear dashboard with real-time payment visibility and easier record-keeping.
Built for a Global Customer Base
Razorpay supports multiple international payment methods — including cards, bank transfers and Apple Pay — so overseas buyers can choose the mode they prefer. This improves the checkout experience and increases the chances of successful payment completion.
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Power your global business the right way. Switch from traditional banking to a
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FAQs
Q1. What is the difference between an EEFC account and an RFC account?
An EEFC account is for Indian businesses to hold export earnings in USD without immediate conversion. An RFC account is for returning NRIs to keep their foreign savings and is not meant for business use.
Q2. How much does it cost to open a USD account in India?
Most banks do not charge a fee to open a USD account in India. You only pay standard bank charges for transactions and conversions.
Q3. Do I have to pay tax on money in a USD account?
You don’t pay tax just for holding money in a USD account. You’re taxed only when you convert it to INR or when the income itself is taxable.
Q4. What are the RBI rules for holding USD in an EEFC account?
As per RBI, the balance in your EEFC account at the end of any month must mostly be converted into INR by the last working day of the following month. The account must also function as a non-interest-bearing current account.
Q5. Do I need a GST number to open a USD account for freelancing?
No, you don’t always need a GST number to open a USD account for freelancing. Most banks accept PAN, Aadhaar, and client invoices as proof of business activity.
Q6. Is it legal for a resident Indian to hold US dollars?
Yes, it is legal for a resident Indian to hold U.S. dollars. You must hold them through permitted accounts such as an EEFC account, RFC account, or as allowed under Foreign Exchange Management Act (FEMA) guidelines.
Q7. Can I receive my salary in a USD account in India?
No, you cannot receive your salary directly into a USD account in India. USD accounts like EEFC are meant only for business-related foreign earnings, not salary deposits.
