EEFC Account Liberalisation: Interest on Balances Up to $1 Million
No longer current — withdrawn, no replacement on file yet
RBI's own words: “it has been decided to withdraw the facility from November 01, 2008” — RBI/2008-09/118
Source: Reserve Bank of India · RBI/2007-2008/154 · issued 06 Oct 2007 · ~1 min read
Quick answerRBI temporarily allows exporters to earn interest on EEFC account balances up to US $1 million via term deposits, valid until October 31, 2008. Banks set their own interest rates.
The rule, in the simplest words
Exporters can now earn interest on up to US $1 million in their EEFC (a special foreign currency account for exporters) account, but only until October 31, 2008.
The money must be kept as a term deposit (a fixed-time savings account) that matures (ends) on or before October 31, 2008.
Banks decide the interest rate themselves, so different banks may offer different rates.
This is a temporary rule, not permanent, and may be reviewed later.
How it plays out — a real example
A forex & trade-finance officer in Indore, Priya, sees that her exporter customer, Mr. Sharma, has $800,000 sitting idle in his EEFC account. She calls him and says, 'Good news! You can now put that money in a term deposit until October 31, 2008, and earn interest at our bank's rate. It's a temporary offer, so let's set it up today.' Mr. Sharma agrees, and Priya updates the system to create the deposit, ensuring it stays under the $1 million limit.
What changed
Previously, EEFC accounts could only be maintained as non-interest bearing current accounts. Now, exporters can hold up to US $1 million as term deposits maturing on or before October 31, 2008, and earn interest at rates determined by banks.
What it means for you
This temporary measure gives small and medium enterprises a chance to earn returns on idle foreign currency balances, helping them manage global market challenges. Banks can now offer term deposit products for EEFC balances, potentially attracting more exporters to maintain higher balances with them.
Historical instruction — do not use for current compliance. This is what was required at the time; it no longer reflects current RBI requirements. If no replacement rule is linked above, that only means none is recorded on our register yet — it does not prove no later applicable rule exists. Confirm on the official RBI source below.
What banks were required to do at the time
Update internal systems to allow EEFC term deposits up to US $1 million per exporter, with maturities up to one year ending by October 31, 2008.
Set and communicate interest rates for these term deposits, ensuring compliance with RBI guidelines.
Inform all eligible exporter customers about the new facility and its temporary nature.
Monitor outstanding balances to ensure no exporter exceeds the US $1 million threshold for interest-bearing deposits.
Who it affects
All Category-I Authorised Dealer Banks, Exporters maintaining EEFC accounts, Small and medium enterprises engaged in exports
Built from our lineage records — each fact carries its provenance; missing history simply is not shown (never guessed).
Can exporters earn interest on the entire EEFC balance?
No, interest is only payable on outstanding balances up to US $1 million per exporter. Balances above this limit remain in non-interest bearing current accounts.
What is the maximum tenure for these term deposits?
Term deposits can be for up to one year, but they must mature on or before October 31, 2008, as this is a temporary measure.
Who decides the interest rate on these deposits?
Banks themselves determine the interest rate for these EEFC term deposits, subject to their internal policies and market conditions.
📜 This document’s life story (1 recorded event, each backed by RBI’s own words)
RBI’s words: “it has been decided to withdraw the facility from November 01, 2008”
📜 Read the original circular — full text as issued by RBI
RBI/2007-2008/154
A.P. (DIR Series) Circular No 13.
October 6, 2007
To,
All
Category - I Authorised Dealer Banks
Madam
/ Sir,
Exchange
Earner's Foreign Currency (EEFC) Account- Liberalisation
Attention
of Authorised Dealer Category - I (AD Category - I) banks is invited to Regulation
4 of Foreign Exchange Management (Foreign Currency Accounts by a person resident
in India) Regulations, 2000 notified vide Notification No.FEMA.10/2000-RB dated
3rd May, 2000 and as amended from time to time, in terms of which a person resident
in India is permitted to open and maintain with an authorized dealer in India
a Foreign Currency Account known as Exchange Earner's Foreign Currency (EEFC)
Account subject to the terms and conditions of the Exchange Earner's Foreign Currency
Account Scheme specified in the Schedule to the above mentioned Notification.
2.
In view of the recent global and domestic developments and with a view to give
an opportunity to small and medium enterprises to manage the challenges in the
global markets, it has been decided, in consultation with Government of India,
to permit all exporters to earn interest on EEFC accounts to the extent of outstanding
balances of US $ 1 million per exporter. This is a purely temporary measure and
valid upto October 31, 2008 and would be subject to further review.
3.
Currently, EEFC accounts are permitted to be maintained in the form of non-interest
bearing current accounts. It will now be possible for account holders to maintain
outstanding balances to the extent of US $ 1 million in the form of term deposits
up to one year maturing on or before 31st October 2008. The rate of interest may
be determined by the banks themselves.
4.
Necessary amendments to the Foreign Exchange Management (Foreign Currency Accounts
by a person resident in India) Regulations, 2000 are being issued separately.
5.
AD Category - I banks may bring the contents of this circular to the notice of
their constituents and customers concerned.
6.
The directions contained in this circular have been issued under Sections 10(4)
and 11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999) and is without
prejudice to permissions / approvals, if any, required under any other law.
Yours faithfully,
(M. Rajeshwar Rao)
General Manager-in-Charge
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2007-2008/154 · issued 06 Oct 2007. The plain-English explanation above is BankPulse’s own independent summary.
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BankPulse Compliance Evidence Pack — generated 05 Aug 2026 · status cross-checked against RBI’s official withdrawal register (refreshed weekly). Official RBI source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=3854&Mode=0 — Plain-English summary by BankPulse (bankpulse.ai), reviewed by our expert reviewer, CA Amit Jain. Independent platform, not affiliated with the Reserve Bank of India; is our own plain-English paraphrase, not RBI’s original wording.
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