Q.1 What is an EEFC Account and what are its benefits?
Exchange Earners’ Foreign Currency Account (EEFC) is an account maintained in foreign currency with an authorized Dealer i.e. a bank dealing in foreign exchange. It is a facility provided to the foreign exchange earners, including exporters to credit 100 percent of their foreign exchange earnings to the account, so that the account holders do not have to convert foreign exchange into Rupees and vice versa, thereby minimizing the transaction costs.
Q.2 Who can open an EEFC account?
All categories of foreign exchange earners, such as individuals, companies, etc. who are resident in India, may open EEFC accounts.
Q.3 Whether EEFC account can be opened by Special Economic Zone (SEZ) Units?
SEZ Units cannot open EEFC accounts.
However a unit located in a Special Economic Zone can open a Foreign Currency Account with an authorized dealer in India subject to certain conditions, SEZ Developers can open EEFC accounts.
Q.4 Is there any restriction on withdrawal in rupees of funds held in an EEFC account?
No. 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 However, the amount withdrawn in Rupees shall not be eligible for conversion into foreign currency and for-re-credit to the account.
Q.5 Whether the EEFC balances can be covered against exchange risk?
Yes, the EEFC account balances can be hedged. The balances in the account sold forward by the account holders has to remain earmarked for delivery. However, the contracts can be rolled over.