Exchange Earners' Foreign Currency Account (EEFC) is an account maintained in foreign currency with an Authorised Dealer i.e. a bank dealing in foreign exchange. It is a facility provided to the foreign exchange earners, including exporters, to credit 100% of their foreign exchange earnings to the account, so that the account holders do not have to convert foreign exchange into Rupees and vice versa, thereby minimizing the transaction costs.
All categories of foreign exchange earners, such as individuals, companies, etc. who are resident in India, may open EEFC accounts.
An EEFC account can be held only in the form of a current account. No interest is payable on EEFC accounts. Cheque facility is available for operation of the EEFC account.
There is no restriction on withdrawal in Rupees of funds held in an EEFC account. However, the amount withdrawn in Rupees shall not be eligible for conversion into foreign currency and for re-credit to the account.
No, SEZ Units cannot open EEFC Accounts. However, a unit located in a Special Economic Zone can open a Foreign Currency Account with an authorized dealer in India subject to certain conditions. SEZ Developers can open EEFC Accounts.
EEFC account balances can be hedged. The balances in the account sold forward by the account holders has to remain earmarked for delivery. However, the contracts can be rolled over.
Resident individuals have been permitted to include resident close relative (s) as defined in the Companies Act, 1956 as a joint holder (s) in this EEFC bank Account. However, they shall not be eligible to operate the account during the life time of the resident account holder (A. P. (DIR. Series) Circular No. 15, dated September 15, 2011).
EEFC account holders are permitted to access the forex market for purchasing foreign exchange only after utilizing fully the available balances in the EEFC accounts. Accordingly ADs are required to obtain a declaration, while selling foreign exchange to their constituents.
Foreign exchange earnings received through an international credit card for which reimbursement has been made in foreign exchange may be regarded as a remittance through normal banking channel and the same can be credited to the EEFC account.
Permissible credits into EEFC account:
·
Inward remittance through normal banking
channels, other than remittances received on account of foreign currency loan
or investment received from abroad or received for meeting specific obligations
by the account holder;
·
Payments received in foreign exchange by a 100 %
Export Oriented Unit or a unit in (a) Export Processing Zone or (b) Software
Technology Park or (c) Electronic Hardware Technology Park for supply of goods
to similar such units or to a unit in Domestic Tariff Area;
·
Payments received in foreign exchange by a unit
in the Domestic Tariff Area for supply of goods to a unit in the Special
Economic Zone (SEZ);
·
Payment received by an exporter from an account
maintained with an authorized dealer for the purpose of counter trade. (Counter
trade is an arrangement involving adjustment of value of goods imported into
India against value of goods exported from India in terms of the Reserve Bank
guidelines);
·
Advance remittance received by an exporter
towards export of goods or services;
·
Payment received for export of goods and
services from India, out of funds representing repayment of State Credit in
U.S. Dollar held in the account of Bank for Foreign Economic Affairs, Moscow,
with an authorized dealer in India;
·
Professional earnings including directors fees,
consultancy fees, lecture fees, honorarium and similar other earnings received
by a professional by rendering services in his individual capacity;
·
Re-credit of unutilized foreign currency earlier
withdrawn from the account;
·
Amount representing repayment by the account
holder's importer customer, of loan/advances granted, to the exporter holding
such account; and
·
The disinvestment proceeds received by the
resident account holder on conversion of shares held by him to ADRs/GDRs under
the Sponsored ADR/GDR Scheme approved by the Foreign Investment Promotion Board
of the Government of India.
Permissible debits into EEFC
account
·
Payment outside India towards a permissible
current account transaction [in accordance to the provisions of the Foreign
Exchange Management (Current Account Transactions) Rules, 2000] and permissible
capital account transaction [in accordance to the Foreign Exchange Management
(Permissible Capital Account Transactions) Regulations, 2000].
·
Payment in foreign exchange towards cost of
goods purchased from a 100% Export Oriented Unit or a Unit in (a) Export
Processing Zone or (b) Software Technology Park or (c) Electronic Hardware
Technology Park
·
Payment of customs duty in accordance with the
provisions of the Foreign Trade Policy of the Central Government for the time
being in force.
·
Trade related loans/advances, extended by an
exporter holding such account to his importer customer outside India, subject
to compliance with the Foreign Exchange Management (Borrowing and Lending in
Foreign Exchange) Regulations, 2000.
·
Payment in foreign exchange to a person resident
in India for supply of goods/services including payments for airfare and hotel
expenditure.