Exchange Earners’ Foreign Currency (EEFC)
A.P. (DIR Series)
Circular No. 96, dated 15-6-2004
Exchange Earners’ Foreign Currency (EEFC) Account Scheme - Liberalisation
In terms of
Regulation No. 4, of the Notification No. FEMA 10/2000-RB dated May 3, 2000, a
person resident in India may open, hold and maintain with an Authorised Dealer
in India, a Foreign Currency Account to be known as Exchange Earners’ Foreign
Currency (EEFC) Account, subject to the terms and conditions of the Exchange
Earners’ Foreign Currency (EEFC) Account Scheme specified in the Schedule to
the said notification.
1. Subsequently, as a part of continuous
process of rationalisation and simplification of procedures and further
liberalisation of the existing regulations relating to exports, the Reserve
Bank of India issued two Press Releases as detailed under to announce
rationalisation/liberalisation of EEFC Account Scheme.
(i) Press Release : 2002-2003/172 dated
August 15, 2002 : The Reserve Bank has permitted individual professionals
to keep up to 100 per cent of their foreign exchange earnings from consultancy
and other services rendered to persons or bodies outside India, in their
foreign Exchange Earners’ Foreign Currency (EEFC) account. The facility has
been permitted for the benefit and convenience of individual professionals,
lawyers, doctors, artists, architects, engineers, consultants, cost/chartered
accountants, directors on boards of overseas companies, etc.
(ii) Press Release : 2002-2003/265 dated
September 6, 2002 : As a further measure towards giving boost to the export
oriented units and rationalisation of the EEFC Account Scheme, it was decided
that there would only be two categories of EEFC Account holders. One, those who
can retain upto 100 per cent of their receipt in foreign exchange and others
who can retain upto 50 per cent of their receipt in foreign exchange.
Accordingly, a 100 per cent Export Oriented Unit (EOU) or a unit situated in (a)
Export Processing Zone (EPZ) or (b) Software Technology Park (STP) or (c)
Electronic Hardware Technology Park (EHTP), are eligible to credit upto 100 per
cent of their foreign exchange receipts to their EEFC Account, against the
existing eligibility of credit upto 70 per cent.
2. Pending issue of the notification
amending the existing Regulations framed under Foreign Exchange Management
Act, 1999, Authorised Dealers were advised to forward the applications in
respect of (i) and (ii) above, to the regional offices of the
Foreign Exchange Department of the Reserve Bank.
3. Government of India has since notified
the above liberalisations, vide Notifications Nos. FEMA.69/2002-RB
dated August 26, 2002 [G.S.R. 755(E) dated November 8, 2002] and No. FEMA.
92/2002-RB dated June 7, 2003 [G.S.R.11(E) dated January 7, 2004]. Accordingly,
it will be in order for Authorised Dealer to extend the facility of opening,
holding and maintaining EEFC Accounts as stated in the notifications, without
reference to the Reserve Bank.
4. It is also brought to the notice of the
Authorised Dealers that in “Amendment of the Regulations” in Notification No.
FEMA.92/2003-RB dated June 7, 2003, item No. has been erroneously stated as
“2” instead of “3”. Authorised Dealer may, therefore, read the item No. as
“3”. Necessary corrigendum to effect this change is being issued separately.
5. Authorised Dealers may bring the
contents of this circular to the notice of their constituents concerned.
6. The directions contained in this
circular have been issued under sections10(4) and 11(1) of the Foreign Exchange
Management Act, 1999 (42 of 1999)
Annex
EEFC Accounts for Professionals
The Reserve Bank
of India has now decided to permit individual professionals to keep up to 100
per cent of their foreign exchange earnings from consultancy and other
services rendered to persons or bodies outside India, in their foreign Exchange
Earners’ Foreign Currency (EEFC) account. The facility is permitted for the
benefit and convenience of individual professionals, such as, scientists,
professors of Indian universities/institutions, economists, lawyers, doctors,
artists, architects, engineers, consultants, cost/chartered accountants,
directors on boards of overseas companies, etc. This would enable the
professionals to use the funds from these accounts to meet their foreign
exchange requirements without any prior approval of the Reserve Bank.
Currently,
residents in India are permitted to maintain Exchange Earners’ Foreign Currency
(EEFC) accounts with banks in India, out of a portion of their earnings in
foreign exchange. Exchange earners’ foreign currency accounts can be opened and
maintained with any branch of a bank dealing in foreign exchange. Cheque
facilities are also available for operations in the EEFC accounts.
The Reserve Bank
has stated that applications from professionals for availing this facility, may
be forwarded by the concerned bank branches to the regional offices of its
exchange control department.
EEFC Account Scheme for EOUs further liberalised
As a part of
continuous process of rationalisation and simplification of procedures and
further liberalisation of the existing regulations relating to exporters, the
Reserve Bank of India has announced rationalisation of the Exchange Earners’
Foreign Currency (EEFC) Account Scheme.
As a further
measure towards giving boost to the export oriented units and rationalisation
of the EEFC Account Scheme, there will now be only two categories of EEFC
account holders. One, those who can retain upto 100% of their receipt in
foreign exchange and others who can retain upto 50% of their receipt in foreign
exchange.
Accordingly, a
100% Export Oriented Unit (EOU) or a unit situated in (a) Export Processing
Zone (EPZ) or (b) Software Technology Park (STP) or (c)
Electronic Hardware Technology Park (EHTP), will now, be eligible to credit
upto 100% of their foreign exchange receipts to their EEFC Account, against the
existing eligibility of credit upto 70%. So far, the facility of crediting upto
100% of receipts was available only to Status Holder Exporters and
Professionals who rendered services in their individual capacity, to entities
outside India . As a result of this liberalisation, the facility of crediting
upto 100% of foreign exchange receipts to their EEFC account will now also be
available to Status Holder Exporters, Professionals, 100% EOUs and units in
EPZ/STP/EHTP.
Pending issue of the notification amending the existing Regulations framed under Foreign Exchange Management Act, 1999 (FEMA), the Regional Offices of the Reserve Bank will expeditiously deal with applications received with regard to the change.