RBI/2006-07/192
A.P. (DIR Series) Circular No.15
November 30,
2006
To
All Category
- I Authorised Dealer Banks
Madam/Sir,
Exchange
Earner's Foreign Currency (EEFC) Account- Liberalisation of Procedure
Attention
of Authorised Dealer Category - I (AD Category - I) banks is invited to Regulation
4 of Foreign Exchange Management (Foreign Currency Accounts by a person resident
in India) Regulations, 2000 notified vide Notification No.FEMA.10/2000-RB dated
3rd May, 2000 and as amended from time to time, in terms of which a person resident
in India is permitted to open and maintain with an authorized dealer in India
a Foreign Currency Account known as Exchange Earner's Foreign Currency (EEFC)
Account subject to the terms and conditions of the Exchange Earner's Foreign
Currency Account Scheme specified in the Schedule to the above mentioned Notification
(copy attached).
2. With
a view to liberalising the procedure further and providing greater flexibility,
it has been decided to allow all categories of foreign exchange earners to credit
up to 100 per cent of their foreign exchange earnings, as specified in the paragraph
1 (A) of the Schedule, to their EEFC Account with immediate
effect. All other terms and conditions of the Scheme will remain unchanged.
3. Necessary
amendments to the Foreign Exchange Management (Foreign Currency Accounts by
a person resident in India) Regulations, 2000 are being issued separately.
4. AD
Category - I banks may bring the contents of this circular to the notice of
their constituents and customers concerned.
5. The
directions contained in this circular have been issued under Sections 10(4)
and 11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999) and is without
prejudice to permissions / approvals, if any, required under any other law.
Yours faithfully,
(M. Sebastian)
Chief General Manager
Schedule
(See Regulation 4)
Exchange
Earner’s Foreign Currency (EEFC) Account Scheme
Provided
that the Reserve Bank may, on an application made to it and on being satisfied
that it is necessary to do so, grant permission to hold higher percentage of
inward remittance/payments in foreign exchange in the EEFC account.
Explanation
: For the purpose of category (2) in column 1, "professional" shall mean:
(i) Director
on Board of overseas company
(ii) Scientist/Professor in Indian University/Institution
(iii) Economist
(iv) Lawyer
(v) Doctor
(vi) Architect
(vii) Engineer
(viii) Artist
(ix) Cost/Chartered Accountant
(x) Any other person rendering professional services in his individual Capacity,
as may be specified by the Reserve Bank from time to time.
(1A) Following
foreign exchange earnings are specified for the purpose of sub-paragraph (1),
namely:
i) inward
remittance through normal banking channel, other than the remittance received
pursuant to any undertaking given to the Reserve Bank or which represents foreign
currency loan raised or investment received from outside India or those received
for meeting specific obligations by the account holder.
ii) payments
received in foreign exchange by a 100 per cent 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 unit or to a unit
in Domestic Tariff Area and also payments received in foreign exchange by a
unit in Domestic Tariff Area for supply of goods to a unit in Special Economic
Zone (SEZ);
iii) payment
received by an exporter from an account maintained with an authorised dealer
for the purpose of counter trade, in accordance with the approval granted in
terms of Regulation 14 of the Foreign Exchange Management (Export of Goods and
Services) Regulations, 2000;
iv) advance
remittance received by an exporter towards export of goods or services;
v) 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 authorised dealer in India,
vi)
Professional earnings including director’s fees, consultancy fees, lecture
fees, honorarium and similar other earnings received by a professional by rendering
services in his individual capacity.
(2) Except
to the extent provided in sub-paragraph (1), no payment received in foreign
exchange by the accountholder from any other person resident in India, shall
be credited to an EEFC account.
Explanation
: For the purpose of the sub-paragraph (1), payment received through an international
credit card for which reimbursement will be provided in foreign exchange may
be regarded as a remittance through normal banking channels.
2. Permissible
credits to EEFC account- Following credits may be made to an EEFC Account,
namely -
i) A
portion of inward remittance/Payment received by the recipient in foreign exchange
subject to the provisions of paragraph (1);
ii) Interest
earned on the funds held in the account;
iii) Recredit
of unutilised foreign currency earlier withdrawn from the account;
iv) Amount
representing repayment by the account holder's importer customer, of loan/advances
granted in terms of clause (iv) of Paragraph 3.
v) Representing
the disinvestment proceeds received by the resident accountholder on conversion
of shares held by him to ADRs/GDRs under the Sponsored ADR/GDR Scheme approved
by the Foreign Investment Promotion Board of Government of India.
3. Permissible
debits to the EEFC account- Following debits may be made to an EEFC
Account, namely -
i) Payment
outside India towards a current account transaction in accordance with the provisions
of the Foreign Exchange Management (Current Account Transactions) Rules, 2000
and towards a capital account transaction permissible under the Foreign Exchange
Management (Permissible Capital Account Transactions) Regulations, 2000.
ii) Payment
in foreign exchange towards cost of goods purchased from 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
iii) Payment
of customs duty in accordance with the provisions of Export Import Policy of
Central Government for the time being in force.
iv) Trade
related loans/advances, 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.
v) Payment
in foreign exchange to a person resident in India for supply of goods/services
including payments for air fare and hotel expenditure.
4. Miscellaneous
i) 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 recredit to the account.
ii) Authorised
dealer may issue cheque books of separate series with the superscription "EEFC
Account" to the account holders maintaining such, accounts, and also satisfy
himself while honouring the cheques that the payment made by the account holder
by issue of a cheque is permissible under these Regulations.