Dollar To Rupee Future Forecast EEFC ACCOUNTS FOR EXPORTERS

EEFC ACCOUNTS FOR EXPORTERS

EEFC (‘Exchange Earners’ Foreign Currency) Account is a facility provided to all categories of exchange earners including Exporters, SEZ developers (except SEZ Units) etc. In the EEFC account the bank allows the exchange earners (resident of India) to maintain their account in any of the permitted foreign currency viz.  USD, GBP, Euro, JPY etc.  In simple words we can say that, ‘EEFC account’ is a one type of resident Indian’s current account wherein one can keep funds in any foreign currency for a stipulated time period. Important to be noted that interest is not paid on EEFC accounts.

Types of Funds receivables: Exchange earners (including professional charges, honorarium etc. received by individuals) who have received funds through normal banking channels, can credit 100% of inward remittance to EEFC account so that the account holders do not have to convert foreign exchange into Rupees and vice versa, thereby minimizing the transaction costs.. The payments received in foreign exchange by a unit in the Domestic Tariff Area, for goods supply to a unit in the Special Economic Zone (SEZ) is also considered as inward remittance. The ADR/GDR disinvestments proceeds under schemes approved by the Foreign Investment Promotion Board of the Government of India are considered as inward remittance therefore allowed to be credited to EEFC account. While taken a foreign currency loan or investment received from abroad or received for meeting specific business obligations by any account holder cannot be credited to EEFC account.

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Advantages of EEFC accounts:

1.   The inward remittance received can directly credited the proceeds to his/her EEFC account without converting the foreign currency into Rupees while holding the currency for up to 30 days or depending upon the prevailing banking norms.

2.   EEFC account holder can use the funds available in his account for the purpose of payment towards cost of goods and services imported, including payment towards Custom duty, airfare, and hotel expenditure.

3.   Exporters can extend trade related loan/advances to overseas buyers out of their EEFC balances without any ceiling subject to compliance of notified provisions.

4.   The foreign currency funds maintained in EEFC account is useful to the account holder when he needs to make payment for his imports in foreign currency at a future date. The basic purpose of  EEFC account is to protect from currency fluctuations in the exchange rates while making exchanges or any payments. While payments the account holder incurs minimum transaction costs in foreign currency for his imports.

5.    Exporters can repay packing credit advances whether availed of in Rupee or in foreign currency from balances in their EEFC account to the extent exports have actually taken place . 

6.   The balances available in EEFC account can be hedged so that the currency   held by the account holder can be sold on a future delivery date which will be   at a rate favorable to account holder. 

7.  Payment in foreign exchange through EEFC account towards goods supplied by a 100 percent Export Oriented Unit or a Unit in (a) Export Processing Zone or (b) Software Technology Park or (c) Electronic Hardware Technology Park is permitted.

8.  The account holders can withdraw funds unrestricted in Indian Rupees anytime they need.

9. The amount withdrawn in Indian Rupees is not eligible for conversion into foreign currency and for re-credit to the account. Importantly, unutilized foreign currency which was withdrawn earlier from the account can be re-credited to the account.

EEFC account holders are free to purchase foreign exchange from Forex market only after utilizing fully the available balances in the EEFC accounts.  Ads/banks are obtaining a declaration, in this effect, while selling foreign exchange to their EEFC account holders.