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EEFC ACCOUNT IN INDIA


Shridhi Jain (Company Secretary)     14 March 2011

Shridhi Jain
Company Secretary 
 155 likes  1678 points

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Dear Members,

Our company is engaged in overseas project. It  has opened a EEFC account with AD. Later on it has opened another EEFC account with the same bank, for the same project but in different branch of that bank.

Now there are Two-three EEFC accounts for the same project out of which only one account is active and other accounts are inactive with some USD balances in them.

I asked the reason, then one old employee said that bank refused to transfer the account from one branch to other, thats y we need to open other account for the same.

Kindly tell me:

1. Can't an EEFC account is transerrable from one branch to other in same bank ?

2.  Can the balance in those two inactive accounts is transferred to the active EEFC account ? Pls mention refering to the related laws.

3. According to FEMA, the EEFC accounts to be closed at the completion of the overseas project. But maintaining two- three accounts for the same purpose is no logic. So can we close those inactive accounts and maintain only one EEFC A/c ?

4. Is this mandatory to let those accounts open till the end of the project ?

Pls reply.

Thanks...

 

avater

Shridhi Jain (Company Secretary)     15 March 2011

Shridhi Jain
Company Secretary 
 155 likes  1678 points

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Pls reply....

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SANTOSH SHAH (Company Secretary)     15 March 2011

SANTOSH SHAH
Company Secretary 
 92 likes  749 points

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Originally posted by : Shridhi Jain

Dear Members,

Our company is engaged in overseas project. It  has opened a EEFC account with AD. Later on it has opened another EEFC account with the same bank, for the same project but in different branch of that bank.

Now there are Two-three EEFC accounts for the same project out of which only one account is active and other accounts are inactive with some USD balances in them.

I asked the reason, then one old employee said that bank refused to transfer the account from one branch to other, thats y we need to open other account for the same.

Kindly tell me:

1. Can't an EEFC account is transerrable from one branch to other in same bank ?

2.  Can the balance in those two inactive accounts is transferred to the active EEFC account ? Pls mention refering to the related laws.

3. According to FEMA, the EEFC accounts to be closed at the completion of the overseas project. But maintaining two- three accounts for the same purpose is no logic. So can we close those inactive accounts and maintain only one EEFC A/c ?

4. Is this mandatory to let those accounts open till the end of the project ?

Pls reply.

Thanks...

 

 Hi Shridhi

EEFC Account is a facility provided to foreign exchange erarners, exporters to maintain account in foreign currency where by foreign exchange earnings are converted to indian rupees and viceversa through authorized dealer and thereby  transaction cost is minimized.

1. Ideally Banks can transfer the balances, and only one EEFC Account can be maintained.

If Banks object, then you can withdraw the amounts from the other 2 accounts which are inactive and get them closed.

As per RBI, there is no restriction on withdrawal of Rupees from EEFC Account

 

"Q 10. Is there any restriction on withdrawal in rupees of funds held in an EEFC account?

Ans. 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."

http://www.rbi.org.in/commonman/English/scriptts/faqs.aspx?id=11#top

 

EEFC Accounts are mandatory in case of Foregin Exchange Earnings, so keeping one active account during the existence of the project should suffice. I dont see any logic in keeping other 2 EEFC Accounts which are inactive.  As far as the objective of keeping an EEFC Account in case of Exchange Earnings is met, one active account of EEFC should do in your case.

Till the completion of the project, if there are foreign exchange earnings that has to go to EEFC Account as per my understanding. So yes EEFC account is required till end of the project.

 

This is my Opinion.

Experts please pardon me if am wrong.

Your valuable advice appreciated.

 

regards

Santosh Shah

 

 

Dhanancheziyan (Sr.Managar (Accts & Admn))     06 December 2013

Dhanancheziyan
Sr.Managar (Accts & Admn) 
 22 points

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Dear Members,

Request your valuable advise on the below:

Our company is involved in export of services and for which remuneration are receivable in different foreign currency (say USD, EURO, SGD, NOK). We intend to open an EEFC A/c. Please suggest the best option for opening EEFC Account (Single account/ multiple a/c for different currencies) and which bank provides best services.

Thank you.

Best Regards,

Dhana

 


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