BANKING AFFAIRS

Detailed explanation-1: -Ans. Exchange Earners’ Foreign Currency Account (EEFC) is an account maintained in foreign currency with an Authorised Dealer Category-I bank i.e. a bank authorized to deal in foreign exchange.

Detailed explanation-2: -It is a facility provided to the foreign exchange earners, including exporters to credit 100 percent of their foreign exchange earnings to the account, so that the account holders do not have to convert foreign exchange into Rupees and vice versa, thereby minimizing the transaction costs.

Detailed explanation-3: -However, unspent foreign exchange originally drawn from EEFC a/c can be credited back to the same EEFC a/c. Transfer of funds from one EEFC account to another, from one branch/bank to another is permitted, provided both the accounts are held in the same names.

Detailed explanation-4: -Foreign Currency Account (FCA) is a transactional account denominated in a currency other than the home currency and can be maintained by a bank in the home country (onshore) or a bank in another country (offshore). Foreign currency accounts are generally not covered by national deposit insurance schemes.

Detailed explanation-5: -Who is an Authorized Dealer (AD)? Ans. An Authorised Dealer (AD) is any person specifically authorized by the Reserve Bank under Section 10(1) of FEMA, 1999, to deal in foreign exchange or foreign securities (the list of ADs is available on www.rbi.org.in) and normally includes banks.