RBI/2004/246
A.P.(DIR Series) Circular No.96

June 15, 2004

To
All Authorised Dealers in Foreign Exchange

Dear Sirs/Madam,

Exchange Earners' Foreign Currency (EEFC) Account Scheme - Liberalisation

In terms of Regulation No.4, of the Notification No.FEMA 10/2000-RB dated May 3, 2000, a person resident in India may open, hold and maintain with an Authorised Dealer in India, a Foreign Currency Account to be known as Exchange Earners’ Foreign Currency (EEFC) Account, subject to the terms and conditions of the Exchange Earners' Foreign Currency (EEFC) Account Scheme specified in the Schedule to the said notification.

1. Press Release : 2002-2003/172 dated August 15, 2002 : The Reserve Bank has permitted individual professionals to keep up to 100 per cent of their foreign exchange earnings from consultancy and other services rendered to persons or bodies outside India, in their foreign exchange earners’ foreign currency (EEFC) account. The facility has been permitted for the benefit and convenience of individual professionals, lawyers, doctors, artists, architects, engineers, consultants, cost/chartered accountants, directors on boards of overseas companies, etc.
2. Press Release : 2002-2003/265 dated September 6, 2002 : As a further measure towards giving boost to the export oriented units and rationalisation of the EEFC Account Scheme, it was decided that there would only be two categories of EEFC Account holders. One, those who can retain upto 100 per cent of their receipt in foreign exchange and others who can retain upto 50 per cent of their receipt in foreign exchange. Accordingly, a 100 per cent Export Oriented Unit (EOU) or a unit situated in (a) Export Processing Zone (EPZ) or (b) Software Technology Park (STP) or (c) Electronic Hardware Technology Park (EFTP), are eligible to credit upto 100 per cent of their foreign exchange receipts to their EEFC Account, against the existing eligibility of credit upto 70 per cent.

As a part of continuous process of rationalisation and simplification of procedures and further liberalisation of the existing regulations relating to exporters, the Reserve Bank of India has announced rationalisation of the Exchange Earners’ Foreign Currency (EEFC) Account Scheme.

As a further measure towards giving boost to the export oriented units and rationalisation of the EEFC Account Scheme, there will now be only two categories of EEFC account holders. One, those who can retain upto 100% of their receipt in foreign exchange and others who can retain upto 50% of their receipt in foreign exchange.

Accordingly, a 100% Export Oriented Unit (EOU) or a unit situated in (a) Export Processing Zone (EPZ) or (b) Software Technology Park (STP) or (c) Electronic Hardware Technology Park (EHTP), will now, be eligible to credit upto 100% of their foreign exchange receipts to their EEFC Account, against the existing eligibility of credit upto 70%. So far, the facility of crediting upto 100% of receipts was available only to Status Holder Exporters and Professionals who rendered services in their individual capacity, to entities outside India . As a result of this liberalisation, the facility of crediting upto 100% of foreign exchange receipts to their EEFC account will now also be available to Status Holder Exporters, Professionals, 100% EOUs and units in EPZ/STP/EHTP.

Pending issue of the notification amending the existing Regulations framed under Foreign Exchange Management Act, 1999 (FEMA), the Regional Offices of the Reserve Bank will expeditiously deal with applications received with regard to the change.

Notification No.FEMA 69/2002-RB August 26,2002

Foreign Exchange Management(Foreign Currency Account by a Person Resident in India) (Amendment) Regulations, 2002

In exercise of the powers conferred by clause (b) of Section 9 and clause(e) of sub-section(2) of Section 47 of the Foreign Exchange Management Act,1999(42 of 1999) and in partial modification of its Notification No.FEMA 10/2000-RB dated May 3, 2000, Reserve Bank of India makes the following amendments to Foreign Exchange Management(Foreign Currency Accounts by a Person Resident in India) Regulations, 2000 namely:

1. These Regulations may be called the Foreign Exchange Management (Foreign Currency Accounts by a Person Resident in India) (Fourth Amendment ) Regulations,2002.
2. They shall come into force on the date of their publication in the official Gazette.

In the Foreign Exchange Management (Foreign Currency Accounts by a Person Resident in India) Regulations, 2000 in the Schedule.

1. for paragraph (1), the following paragraph shall be substituted, namely;

Entity/person Limit(per cent)

1. A Status Holder Exporter(as defined in EXIM Policy in force) 100
2. A resident in India for professional Services rendered in his individual capacity 100
3. 100 per cent Export Oriented Unit/s.
   Unit/s in EPZs/STPs/EHTPs 70
4. Any other person resident in India 50

Provided that the Reserve Bank may, on an application made to it and on being satisfied that it is necessary to do so, grant permission to hold higher percentage of inward remittance/payments in foreign exchange in the EEFC account.

Explanation: For the purpose of category(2) in column 1,"professional" shall mean:

1. Director on Board of overseas company
2. Scientist/Professor in Indian University/Institution
3. Economist
4. Lawyer
5. Doctor
6. Architect
7. Engineer
8. Artist
9. Cost/Chartered Accountant
10. Any other person rendering professional services in his individual
Capacity, as may be specified by the Reserve Bank from time to time".

"(vi) Professional earnings including director’s fees, consultancy fees, lecture fees, honorarium and similar other earnings received by a professional by rendering services in his individual capacity"

Notification No.FEMA 92/2003-RB dated June 7,2003

Foreign Exchange Management(Foreign Currency Account by a Person Resident in India) (Fourth Amendment)Regulations, 2003

In exercise of powers conferred by clause(b) of Section 9 and clause(e) of sub-section 2 of Section 47 of the Foreign Exchange Management Act,1999(42 of 1999) and in partial modification of its Notification No.FEMA 10/2000-RB dated May 3, 2000, Reserve Bank of India makes the following amendments to Foreign Exchange Management (Foreign Currency Accounts by a Person Resident in India) Regulations, 2000 namely:

1. These Regulations may be called the Foreign Exchange Management (Foreign Currency Accounts by a Person Resident in India) (Fourth Amendment) Regulations, 2003.
2. They shall come into force from the date of their publication in the Official Gazette.

In the Foreign Exchange Management(Foreign Currency Accounts by a Person Resident in India) Regulations, 2000, in the Schedule; in paragraph 1, in sub-paragraph (1) in the table, in item 2, for the figure "70", the figure "100" shall be substituted.

G.S.R.11(E) dated January 7, 2004