RESERVE BANK OF INDIA
Foreign Exchange Department
Central Office
Mumbai - 400 001
A. P. (DIR Series) Circular No. 124
May 10, 2012
To
AD Category I Authorised Dealer Banks
Madam/ Sir,
Exchange Earner's Foreign Currency (EEFC) Account
Attention of Authorised Dealer Category - I (AD Category - I) banks is invited
to A.P. (DIR Series) Circular No.15 dated November 30, 2006 in terms of which
all foreign exchange earners were permitted to retain 100% of their forex
earnings in EEFC account with any AD in India.
- On a review of the Scheme, it has been decided as under :-
- 50% of the balances in the EEFC accounts should be converted forthwith into
rupee balances and credited to the rupee accounts as per the directions of the
account holder. This process may be completed within a fortnight from the date
of the circular and compliance reported to the Chief General Manager, Foreign
Exchange Department, Central Office, Trade Division, Amar Building, Sir P.M.
Road, Fort, Mumbai 400 001
- In respect of all future forex earnings, an exchange earner is eligible to
retain 50% (as against the previous limit of
100%) in non-interest bearing EEFC
accounts. The balance 50% shall be surrendered for conversion to rupee balances.
- The facility of EEFC scheme is intended to enable exchange earners to save on
conversion/transaction costs while undertaking forex transactions in future.
This facility is not intended to enable exchange earners to maintain assets in
foreign currency, as India is still not fully convertible on Capital Account.
Accordingly, EEFC
account holders henceforth will be permitted to access the forex market for
purchasing foreign exchange only after utilising fully the available balances in
the EEFC accounts. ADs may, accordingly, obtain a declaration while selling
foreign exchange to their constituents.
- It may be noted that the provisions at paragraph 2(b) and 2(c) above will
apply, mutatis mutandis, also to holder of either a Resident Foreign Currency
Account (RFC) or a Diamond Dollar Account (DDA).
- AD Category - I banks may bring the contents of this circular to the notice
of their constituents and customers concerned.
- 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
are without prejudice to permissions / approvals, if any, required under any
other law.
Yours faithfully,
(Rashmi Fauzdar)
Chief General Manager
RBI/2011-12/547