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RBI has withdrawn the condition from its May 10, 2012 circular that EEFC account holders must first exhaust their EEFC balances before accessing the forex market to purchase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
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.