(This post elucidates information on who can open EEFC account, the documents required for opening EEFC account, what are the permissible credits and permissible debits allowed in the EEFC account)
What is EEFC account?
Ans.: EEFC account is the abbreviation of Exchange Earners Foreign Currency account. In this account the account holder maintains a current account in foreign currency like USD,GBP,Euro, JPY etc.
Q: Who can open EEFC account?
Ans.: Any person who earns foreign exchange such as individuals, companies, etc. who are resident in India, can open EEFC accounts.
Q: what are the information/documents required for opening EEFC account?
If a new customer wants open EEFC account, the applicant need to first open a current account with the Bank and then open EEFC account. If the applicant is enjoying credit facilities then NOC from the Lending Bank(s) is required. The duly filled in signed EEFC account opening form shall be accompanied with the following.
- The Board Resolution / Partnership letter / proprietorship letter for opening the EEFC account indicating the currency in which the account is to be opened.
- Status proof of the applicant such as whether the unit is located in SEZ, STP or EHTP etc.
- Importer- Exporter Code if applicable.
- Proof of PAN/ Form 60.
Q: What type of inward remittances can be credited to EEFC account?
Ans.: The following rules apply for crediting inward remittance to EEFC account.
- You can credit 100% of inward remittance received 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 cannot be credited to EEFC account.
- The professional earnings like director’s fees, consultancy fees, lecture fees, honorarium etc. received by an individual can also be credited to EEFC account.
- Remittances received on account of foreign currency loan or investment received from abroad or received for meeting specific obligations by the account holder cannot be credited to EEFC account.
- The amount withdrawn in Indian Rupees is not eligible for conversion into foreign currency and for re-credit to the account. However, unutilized foreign currency earlier withdrawn from the account can be re-credited to the account.
Q: Whether payments received on account of goods supplied to unit in SEZ or disinvestment proceeds of ADR/GDR can be credited to EEFC account?
Ans.: The 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) including Export Processing Zone or Software Technology Park or Electronic Hardware Technology Park in India are treated as inward remittance for the purpose. The disinvestment proceeds of ADR/GDR Scheme approved by the Foreign Investment Promotion Board of the Government of India are also treated as inward remittance and therefore permitted to be credited to EEFC account.
Q: What are the permissible debits in EEFC Account?
The following type debits in EEFC account are allowed.
- All Payments related to current account and capital account transactions permissible under FEMA rule 2000.
- Payments in foreign currency 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.
- 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 currency to a person resident in India for supply of goods/services including payments for airfare and hotel expenditure.
- In addition to above, 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 favourable to account holder. In that case, the balances in the account sold forward by the account holders have to remain earmarked for delivery. Such forward contracts can also be rolled over.
- The account holders do not have any restriction in withdrawing funds in Indian Rupees from his EEFC account.
EEFC account holders are permitted to purchase foreign exchange from Forex market only after utilizing fully the available balances in the EEFC accounts. ADs are obtaining a declaration, in this effect, while selling foreign exchange to their EEFC account holders.
Q: Whether cheque book is issued to EEFC account?
Ans.: The AD branch maintaining EEFC account may issue separate Current Account cheque book with the superscription “EEFC Account” on each cheque leaf. The Bank must satisfy that the payment made by the account holder is permissible under FEMA Regulations, while honouring the cheques.
Q: Whether the account holder earns interest on foreign currency deposit held in the bank?
Ans.: No interest will be paid on balance held in the account.
Q: Whether nomination is allowed?
Ans.: Nomination facility is allowed only to Individual and Sole Proprietor. However, nominee’s consent for the same is required.