A.D.(M.A. Series) Circular No.37 October 9, 1998
RESERVE BANK OF INDIA
EXCHANGE CONTROL DEPARTMENT
CENTRAL OFFICE
MUMBAI 400 001


To,

All Authorised Dealers in Foreign Exchange

Dear Sir,

Exchange Earners Foreign Currency (EEFC) Account

Please refer to the instructions contained in paragraph 14D.4 of Exchange Control Manual (ECM) regarding utilisation of funds held in EEFC Accounts. It has now been decided to permit use of funds held in EEFC accounts by account holders, also for their business related payments in India including payments for air fare and hotel expenditure. Accordingly, authorised dealers may permit the account holders maintaining EEFC accounts to make payments in foreign exchange in India to other residents out of funds held in their EEFC accounts, in consideration of supply of goods and services to the account holders. A copy of the Notification No.FERA 186/98-RB dated 4th September 1998 issued by Reserve Bank granting general permission to residents for receiving such payments from the EEFC account holders is enclosed. The resident beneficiaries of the payments received in foreign exchange from the EEFC account holders will be required to surrender the foreign exchange within seven days of its receipt to an authorised dealer as per the existing regulations. The resident beneficiaries of foreign exchange, in such cases, will not be eligible for EEFC facility.

2. It is clarified that funds held in EEFC accounts may also be allowed to be utilised for payment of airfare and hotel expenditure abroad in connection with visits abroad of the employees/directors etc. of the account holder.

3. The following consequential amendment may be carried out in Exchange Control Manual.

Volume I(i) A new sub-paragraph (iii) may be added in paragraph 14D.1 as per Slip 1.

(ii) A note may be added at the end of paragraph 14D.4 as per Slip 2.

(iii) A new item (12) may be added in Annexure I to Chapter 14 as per Slip 3.

Volume II

(iv) Notification No.F.E.R.A.186/98-RB dated 4th September 1998 may be added in Appendix III under Section 8 as per Slip 4.

4. Authorised dealers may bring the contents of this circular to the notice of their constituents concerned.

5. The directions contained in this circular have been issued under Section 73(3) of the Foreign Exchange Regulation Act, 1973 (46 of 1973) and any contravention or non-observance thereof is subject to the penalties prescribed under the Act.

Yours faithfully,

KHIIZER AHMED,

Chief General Manager,

Slip 1

[AD/MA 37/1998]

14D.1 (iii) The resident beneficiaries of the payments received in foreign exchange from the EEFC account holders in accordance with Notification No.F.E.R.A.186/98-RB dated 4th September 1998 issued byReserve Bank will be required to surrender the foreign exchange within seven days of its receipt to an authorised dealer as per the existing regulations. The resident beneficiaries of foreign exchange in such cases will not be eligible for EEFC facility.

Slip 2

[AD/MA 37/1998]14D.4

Slip 3

[AD/MA 37/1998]

Slip 4

[AD/MA 37/1998]

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