On July 31, 2012, RBI has revised its guidelines related to EEFC (Export Earners’ Foreign Currency) Account vide notification RBI/2012-13/151 A. P. (DIR Series) Circular No. 12.
As per revised guidelines, credit of 100% foreign exchange earnings to the EEFC account is allowed subject to the condition that the sum total of the accruals in the account during a calendar month should be converted into Rupees on or before the last day of the succeeding calendar month after adjusting for utilization of the balances for approved purposes or forward commitments.
In simple terms, balances outstanding in an EEFC account as on July 31, 2012 and those balances that would accrue in the account during the month of August 2012 shall get converted to Rupee balances on or before close of business on September 30, 2012. And, similar procedures to be followed for subsequent months.
Following is the history of RBI guidelines relating to EEFC account.
1. The foreign exchange earners were permitted to retain 100% of their foreign exchange earnings in EEFC account with any AD in India as per A.P. (DIR Series) Circular No.15 dated November 30, 2006.
2. Subsequently, the foreign exchange earners were eligible to retain only 50% of his/her export earnings in EEFC accounts and the balance 50% to be surrendered for conversion to rupee balances as per A.P. (DIR Series) Circular No. 124 dated May 10, 2012
3. And now, 100% of the credit to the EEFC account allowed subject to the condition as explained above.
Please note that this circular would also apply to Resident Foreign Currency (RFC) and Diamond Dollar Accounts (DDA).