What changed
The temporary permission allowing exporters to earn interest on EEFC account balances up to USD 1 million, valid until October 31, 2008, has been withdrawn after review with the Government of India. From November 1, 2008, all EEFC accounts can only be opened and maintained as non-interest bearing current accounts.
What it means for you
Exporters will lose the ability to earn interest on their EEFC balances beyond the current temporary period. Banks must reclassify existing EEFC accounts to non-interest bearing current accounts from November 1, 2008, impacting customer relationships and product offerings.
What you must do
- Inform all EEFC account holders about the withdrawal of interest facility effective November 1, 2008.
- Reclassify all EEFC accounts as non-interest bearing current accounts from November 1, 2008.
- Update internal systems and product documentation to reflect the change.
- Ensure compliance with FEMA Sections 10(4) and 11(1) for this circular.
Who it affects
All Category-I Authorised Dealer Banks, Exporters maintaining EEFC accounts
What is the effective date for the withdrawal of interest on EEFC accounts?
The withdrawal is effective from November 1, 2008. After this date, all EEFC accounts must be non-interest bearing current accounts.
Does this circular affect all EEFC accounts or only those with balances over USD 1 million?
It affects all EEFC accounts. The earlier temporary measure allowed interest on balances up to USD 1 million per exporter, but from November 1, 2008, no EEFC account can earn interest.