Mumbai, May, 10:The Reserve Bank of India (RBI), the sole regulator of foreign exchange for the country, has asked all exporters to convert 50 % of the balances in the EEFC accounts in dollar to the rupee accounts for control the rupee to slide further against the dollar.
Earlier, all foreign exchange earners were permitted to retain 100% of their forex earnings in EEFC account with any authorized dealer category - I (AD Category - I) banks in India.
As the rupee slides despite the RBI intervention it has decided to ensure the supply of dollar in the process it ask all AD – banks to convert 50% of the balances in the EEFC accounts into rupee balances and credited to the rupee accounts as per the directions of the account holder.
It also asked them to ensure that the process would 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.
According to extent guidelines, 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 foreign exchange 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 obtain a declaration while selling foreign exchange to their constituents.
According to RBI extent policy, the provisions above will apply to holder of either a Resident Foreign Currency Account (RFC) or a Diamond Dollar Account (DDA).
All authorized dealer banks and authorized banks may bring the contents of this circular to the notice of their constituents and customers concerned.
However, RBI latest policy is temporary arrangement for control the rupee depreciation. In longer term this guide line would be roll back.
Mumbai, May, 10:The Reserve Bank of India (RBI), the sole regulator of foreign exchange for the country, has asked all exporters to convert 50 % of the balances in the EEFC accounts in dollar to the rupee accounts for control the rupee to slide further against the dollar.
Earlier, all foreign exchange earners were permitted to retain 100% of their forex earnings in EEFC account with any authorized dealer category - I (AD Category - I) banks in India.
As the rupee slides despite the RBI intervention it has decided to ensure the supply of dollar in the process it ask all AD – banks to convert 50% of the balances in the EEFC accounts into rupee balances and credited to the rupee accounts as per the directions of the account holder.
It also asked them to ensure that the process would 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.
According to extent guidelines, 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 foreign exchange 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 obtain a declaration while selling foreign exchange to their constituents.
According to RBI extent policy, the provisions above will apply to holder of either a Resident Foreign Currency Account (RFC) or a Diamond Dollar Account (DDA).All authorized dealer banks and authorized banks may bring the contents of this circular to the notice of their constituents and customers concerned.
However, RBI latest policy is temporary arrangement for control the rupee depreciation. In longer term this guide line would be roll back.
