RBI rejects plea for interest in EEFC

Mumbai: The Reserve Bank of India (RBI) has ruled out permitting banks to offer interest on the balances held by exporters in their Exchange Earners Foreign Currency (EEFC) account. This is because such balances are in the current account and cannot be treated as deposits.

Explaining as to why the RBI did not agree to the exporters request, RBI general manager K Ramasubramanian said the payment of interest will make the EEFC account an investment account. The EEFC account is a current account meant for trade-related payments and, therefore, the payment of interest cannot be permitted in this account.

Speaking at a seminar (International Trade Finance - The Present and the Future) here, Ramasubramanian said the RBI is also revising the project export memorandum. The revised project export memorandum will facilitate project exporters to know the exchange control regulations in a consolidated and simple manner.

On the retail dispensation towards foreign exchange, Ramasubramanian said for all current account transactions, except those indicated under the current account rules framed by the government, the retail dispensation of foreign exchange is freely permitted.