What is EEFC Account?
An EEFC account, short for Exchange Earners' Foreign Currency account, is a foreign-currency current account that an Indian resident who earns foreign exchange can open with an AD bank in India. Instead of the bank converting every dollar or euro you receive into rupees, part or all of your export proceeds can be credited to the EEFC account and held in that currency. You can later convert to rupees when you choose, or use the balance for permitted foreign payments, such as paying for software subscriptions or overseas vendors.
Why it matters for exporters
An EEFC account gives you some control over timing and conversion. If you have foreign-currency costs, paying them from EEFC balances can avoid converting twice and paying a markup each way. If you expect the rupee to move, you can choose when to convert, though that is a commercial call and not advice from this site. EEFC balances are typically non-interest bearing, so parking large sums for long periods has a cost.
Money credited to an EEFC account is still in India, so it counts as received for realisation purposes. Your bank still issues a FIRA and can match the receipt to your EDF entry. To open one, ask your bank about its process; our EEFC account request letter gives you a starting format.
Example
Atlas UX Studio earns about USD 15,000 a month and pays USD 2,000 a month for design tools and contractors abroad. It asks its bank to credit all dollar receipts to an EEFC account, pays the USD 2,000 from it, and converts the rest to rupees in two lots during the month.
Common confusion
An EEFC account is not an account abroad, and it is not a savings account. It is a current account held in India. Read export proceeds in EEFC accounts for limits and rules, and confirm details with your bank.