Current · Source: Reserve Bank of India · RBI/2012-13/390 · issued 22 Jan 2013 · ~1 min read
Quick answerRBI has removed the requirement for EEFC, DDA, and RFC Domestic account holders to fully use their balances before buying forex from the market, easing operational difficulties for account holders and AD Category-I banks.
The rule, in the simplest words
If you have an EEFC account (a special bank account for foreign money you earned), you no longer have to spend all the money in that account before you buy more foreign money from the market.
This new rule also applies to Diamond Dollar Accounts (DDA) and RFC Domestic accounts (accounts for foreign currency you bring back to India).
Banks (called AD Category-I banks) don't have to check if you used up your EEFC balance first before letting you buy foreign money—this makes their job easier.
All other old rules for these accounts still stay the same—only this one rule about using the balance first is removed.
How it plays out — a real example
A forex & trade-finance officer in Mumbai, Priya, has a customer with an EEFC account who wants to buy US dollars for an import payment. Before this rule, Priya had to check if the customer's EEFC balance was zero first. Now, she can process the dollar purchase right away, even if the customer still has money in the EEFC account, saving time and paperwork.
What changed
RBI has withdrawn the condition from its May 10, 2012 circular that EEFC account holders must first exhaust their EEFC balances before accessing the forex market to purchase foreign exchange. This relaxation also applies to RFC (Domestic) and Diamond Dollar accounts. All other existing terms and conditions for these accounts remain unchanged.
What it means for you
Account holders can now buy foreign exchange from the market even if they have unutilized balances in their EEFC, DDA, or RFC Domestic accounts, giving them more flexibility. For AD Category-I banks, this reduces the operational burden of monitoring and enforcing the earlier 'use-it-first' rule, simplifying compliance and customer service.
What you must do
Update internal procedures and system checks to remove the requirement for EEFC balance utilization before forex market access.
Communicate the circular's contents to all relevant constituents and customers holding EEFC, DDA, or RFC Domestic accounts.
Ensure all other terms and conditions from earlier circulars remain in force and are properly applied.
Who it affects
AD Category-I banks, EEFC account holders, Diamond Dollar Account (DDA) holders, Resident Foreign Currency (RFC) Domestic account holders
❓ Common questions
Does this circular remove all conditions on EEFC accounts?
No. Only the condition requiring full utilization of EEFC balances before accessing the forex market has been removed. All other terms and conditions from earlier circulars remain unchanged.
Does this relaxation apply to RFC (Domestic) and Diamond Dollar accounts as well?
Yes, the circular explicitly states that the same relaxation applies to RFC (Domestic) and Diamond Dollar accounts.
When did this circular become effective?
The circular was issued on January 22, 2013, and its directions are effective from that date.
📜 Read the original circular — full text as issued by RBI
RBI/2012-13/390
A.P.(DIR Series) Circular No. 79
January 22, 2013
To
All Category - I Authorized Dealer Banks
Madam/ Sir,
Exchange Earner's Foreign Currency (EEFC) Account, Diamond Dollar
Account (DDA) & Resident Foreign Currency (RFC) Domestic Account
Attention of Authorised Dealer (AD) Category - I banks is invited to A.P. (DIR Series) Circulars Nos. 15 , 124 , 128 , 8 and 12 dated November 30, 2006, May 10, 2012, May 16, 2012, July 18, 2012 and July 31, 2012 respectively, in terms of which all the foreign exchange earners were permitted to retain their foreign exchange earnings in EEFC account subject to certain conditions with an Authorized Dealer (AD) Category - I bank in India.
2. Keeping in view the operational difficulties faced by the account holders and the Authorized Dealer banks, as a measure of rationalization, it has been decided to dispense with the stipulation made in A.P. (DIR Series) Circular No. 124 dated May 10, 2012, that EEFC account holders henceforth will be permitted to access the forex market for purchasing foreign exchange only after utilizing fully the available balances in the EEFC accounts.
3. The above instructions would also apply to the RFC (Domestic) and Diamond Dollar accounts.
4. All other terms and conditions stipulated in the Circulars referred to above remain unchanged.
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 are without prejudice to permissions / approvals, if any, required under any other law.
Yours faithfully,
(Rashmi Fauzdar)
Chief General Manager
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2012-13/390 · issued 22 Jan 2013. The plain-English explanation above is BankPulse’s own independent summary.
Update internal procedures and system checks to remove the requirement for EEFC balance utilization before forex market access.
📜 Compliance
Communicate the circular's contents to all relevant constituents and customers holding EEFC, DDA, or RFC Domestic accounts.
Ensure all other terms and conditions from earlier circulars remain in force and are properly applied.
Grouped from the action items above — a single circular may involve more than one team.
Worked example & action-note template
Example: if you are an IT/Systems lead at a bank this circular applies to (AD Category-I banks, EEFC account holders, Diamond Dollar Account (DDA) holders, Resident Foreign Currency (RFC) Domestic account holders), your first concrete step on “EEFC, DDA & RFC Domestic Account Rule Relaxed” is: “Update internal procedures and system checks to remove the requirement for EEFC balance utilization before forex market access.” (RBI issued this 22 Jan 2013).
Action required: Update internal procedures and system checks to remove the requirement for EEFC balance utilization before forex market access.
Action required: Communicate the circular's contents to all relevant constituents and customers holding EEFC, DDA, or RFC Domestic accounts.
Action required: Ensure all other terms and conditions from earlier circulars remain in force and are properly applied.
Owner: ____________ Target date: ____________
Board/committee approval needed? Y / N
Evidence filed in compliance register on: ____________
Built only from this circular’s own published fields — not legal advice; always confirm against the official RBI source.
💬 Banker Discussion
Discuss this circular with fellow bankers — reply, upvote what helps, report what doesn’t belong. Be professional; no client data. Views are the commenter’s own, not BankPulse’s.
BankPulse Compliance Evidence Pack — generated 03 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=7821&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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