PART D - EXCHANGE EARNERS FOREIGN CURRENCY (EEFC) ACCOUNTS |
General |
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permitted exporters of goods and services and other beneficiaries of inward remittances in convertible foreign currency, other than those remittances received pursuant to undertakings given by them or those received for meeting specific obligations, to open and maintain with authorised dealers in India accounts expressed in foreign currency and titled 'Exchange Earners Foreign Currency (EEFC) Accounts' and to credit to such accounts amounts not exceeding 50% of such remittances and operate on such accounts. In the case of 100% Export Oriented Units or units located in Export Processing Zones or in Software Technology Parks or in Electronic Hardware Technology Parks, amounts up to 70% of the remittances can be credited to such accounts. Authorised dealers may also allow credits to EEFC accounts in the following cases: |
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a) |
Up to 50%/70% of the inward remittances, as the case may be, received towards export advance in freely convertible currencies subject to monitoring of the advances received by the authorised dealers concerned in terms of paragraph 6C.6. |
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b) |
Up to 50% of the payments received by exporters by debit to U.S.Dollar Escrow accounts maintained in India as also under the foreign currency debt repayment route, towards value of goods exported by them. |
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c) |
Up to 50% of the payments received by hotels from Credit Card Servicing Organisations (CCSO) in India in rupees against goods/services sold/supplied to foreign tourists against international credit cards issued abroad, provided CCSO in India confirms that the total bill amount as per charge slips received by the hotels has been realised in convertible foreign currency in an approved manner. In such cases foreign exchange equivalent of the 50% of the amount received in rupees may be credited to their EEFC accounts by converting at the market rate. |
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Note: Unspent foreign exchange surrendered out of the foreign exchange obtained for travel abroad may be re-credited to EEFC account, provided the foreign exchange was released by debit to the same EEFC account .
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(ii) The resident beneficiaries of the payments received in foreign exchange from the EEFC account holders in accordance with Notification No.F.E.R.A.186/98-RB dated 4th September 1998 issued by Reserve Bank will be required to surrender the foreign exchange within seven days of its receipt to an authorised dealer as per the existing regulations. The resident beneficiaries of foreign exchange in such cases will not be eligible for EEFC facility.
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EEFC Accounts not permitted in certain cases |
14D.2 (i) Exporters maintaining foreign currency accounts
in terms of paragraph
6A.12 are not eligible to maintain EEFC accounts.
14D.2(ii) Authorised dealers may maintain EEFC account in
any convertible foreign currency and in any form (current, savings or term deposit
accounts). Savings bank accounts in the names of firms, companies, etc. should,
however, not be permitted.
14D.3
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Authorised dealers
maintaining EEFC accounts may prescribe a suitable minimum balance |
for these accounts. |
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Utilisation of Funds for Approved Purposes only
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14D.4 (i) Authorised dealers may allow utilisation of funds
held in EEFC accounts for making all bonafide payments of the account holders
in foreign exchange connected with their trade and business related transactions
which are of a current account nature (besides certain permitted capital account
transactions) without any restrictions except in the case of remittance of agency
commission. In other words such business/trade related remittances may be allowed
by authorised dealers beyond the monetary or percentage ceiling if any, prescribed
in ECM, except that where rate of agency commission on export exceeds 12.5%
of invoice value prior approval of Reserve Bank should be obtained.
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14D.4
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(i) |
The funds held in EEFC accounts
may be permitted to be utilised by the account |
holder for all bona fide payments
of the account holder subject to the limits and conditions and on verification
of documents prescribed in the Manual and/or against permits issued
by Reserve Bank. Authorised dealers may also permit utilisation of the
funds held in EEFC accounts for making bona fide payments of the account
holders in foreign exchange connected with their trade and business
related transactions which are of a current account nature (i.e. other
than for capital account transactions viz. for investments abroad or
for repayment of loans, etc.), without any restriction except in the
case of remittance of agency commission on exports. In other words such
business/trade related remittances may be allowed by authorised dealers
beyond the monetary or percentage ceilings, if any, prescribed in the
Manual or for similar other purposes not expressly stated therein but
where the rate of agency commission on exports exceeds 12.5 per cent
(cf. paragraph
6E.2) prior approval of Reserve Bank should be obtained. Before
allowing such remittances authorised dealers should satisy themselves
about the bona fides of the transaction with reference to the documentary
evidence produced by the account holder. Doubtful cases should, however,
be referred to Reserve Bank with full details together with comments
of the authorised dealer. |
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(ii) |
Funds held in EEFC accounts
may also be allowed to be used for the purposes |
listed in Annexure
I. |
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NOTE: Funds held in EEFC accounts may also be allowed to be
utilised for payment of air fare and hotel expenditure abroad in connection
with visits abroad of the employees/directors etc. of the account holder.
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Reserve Requirements
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14D.5 The balances in the EEFC accounts will be subject to
Cash Reserve Ratio and Statutory Liquidity Ratio as prescribed by Reserve Bank
from time to time.
14D.6
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The rate of interest
payable on the balances in savings/term deposit accounts will be |
determined by the banks taking
into account the interest rates prevailing in international markets.
No interest is payable on the balances held in the form of current accounts. |
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Transfer to Other Accounts
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14D.7
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Funds held in the
EEFC accounts will not be permitted to be sold/transferred to accounts |
of other residents in India.
However, authorised dealers may permit, on application, transfer of
funds from the EEFC account/s of the Indian tour operator/s to EEFC
accounts of hotels and other establishment/s provided the tour operator
confirms that the amount represents the proportionate share of the latter
in relation to the services rendered to foreign tourists. |
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Liquidation of Export Credit
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14D.8
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In case the exporter
has obtained any export credit from a bank against shipment in |
respect of which a percentage
of the proceeds is sought to be credited to the EEFC account, authorised
dealers should ensure that the export credit has been liquidated fully
before affording any credit out of export proceeds to the EEFC account. |
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Issue of cheques against EEFC balances
14D.8A i) Authorised dealers may allow EEFC
account holders the facility of making payments from such accounts for eligible
purposes by issue of cheques to the beneficiaries of the payment. In order to
facilitate easy identification of cheques drawn on EEFC accounts, authorised
dealers may issue to their constituents maintaining EEFC accounts with them,
separate cheque books containing a special series of cheques distinct from cheques
issued on domestic rupee accounts and NRE accounts superscribed with the words
'EEFC Account'. Authorised dealers may fix their own requirement of minimum
balance in the account for being eligible to avail of cheque facility. While
allowing the above facility authorised dealers should advise the EEFC account
holders that while issuing cheques for making payments in foreign exchange out
of funds held in EEFC accounts, they will ensure that the cheques are issued
for payments for approved purposes only and the relevant exchange control regulations
are complied with.
ii) EEFC account holders should immediately after
issue of the cheque, but in any case not later than seven days, submit an application
to authorised dealer on form A1 or A2, as the case may be, together with supporting
documents giving full particulars of transaction for which cheque was issued.
iii) While making payment of cheques issued on
EEFC account, authorised dealers should satisfy themselves that the transaction
in question is permissible under the current exchange control regulations. Any
payment made by issue of a cheque for a purpose for which use of funds held
in EEFC account is not permissible should be reported to Reserve Bank promptly.
iv) The transaction should be reported in appropriate
'R' return when the cheque is cleared for payment.
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Facilities against the Security of Deposits
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14D.9
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Credit facilities
whether fund based or non fund based, in rupees or in foreign exchange,
may be granted either in India or abroad, against the security of funds
held in the EEFC accounts. The repayment of such credit facilities should
be made out of the balance in the EEFC account of the concerned depositor.
The facility should be used for normal business purposes only and not
for any on-lending or for investment in shares, securities, etc. |
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