Have you ever wondered how businesses and individuals in India manage foreign currency transactions without losing money in exchange conversions? Or how NRIs returning to India can still maintain their foreign earnings?
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- Learn about EEFC, RFC, and Diamond Dollar Accounts
- Understand how to reduce exchange risks & conversion costs
- Discover who can open these accounts & how they work
🔴 Watch the full video now & drop your questions in the comments!
👉 Before we dive in, watch this video for a complete breakdown:
Foreign Currency Accounts: Everything You Need to Know
What Are Foreign Currency Accounts?
Foreign currency accounts allow Indian residents, NRIs, and businesses to hold and transact in foreign currencies within or outside India. These accounts help mitigate exchange risks, reduce conversion costs, and simplify global transactions.
Under the Foreign Exchange Management Act (FEMA), 1999, these accounts are governed by RBI regulations, ensuring legal compliance and financial security.
Types of Foreign Currency Accounts
1. EEFC Account (Exchange Earner’s Foreign Currency Account)
Who can open it?
- Exporters & service providers earning in foreign currency
- IT professionals & freelancers receiving payments from abroad
- Consultants working for international clients
Benefits:
- Hold earnings in foreign currency without conversion
- Reduce exchange rate risk
- Pay for imports & overseas expenses directly
📌 Example:
An IT company in Hyderabad receives payments from European clients in Euros. Instead of converting it immediately to INR, they keep it in their EEFC account and use it for future expenses like software purchases and consultant payments.
2. RFC Account (Resident Foreign Currency Account)
Who can open it?
- NRIs returning to India permanently
- Individuals receiving pensions, salaries, or investments from abroad
Benefits:
- Hold foreign earnings without conversion
- Use funds for international travel, education & remittances
- Convert to INR anytime at preferred exchange rates
📌 Example:
Rajesh, a retired professor from Canada, moves back to India. He continues receiving his pension in Canadian Dollars and keeps it in his RFC account. Whenever needed, he converts it to INR at the best available rate.
3. Diamond Dollar Account (DDA)
Who can open it?
- Exporters dealing in diamonds, jewelry, & precious stones
- Businesses with an annual export turnover of ₹5 crores or more
Benefits:
- Maintain foreign currency earnings without conversion
- Make payments for imports directly in foreign currency
- Open up to 5 DDA accounts per business
📌 Example:
Kohinoor Diamonds Pvt Ltd exports polished diamonds to the US. Instead of converting their earnings into INR, they deposit them in their DDA and use them to pay for raw materials and imports.
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Conclusion
Understanding foreign currency accounts is crucial for exporters, NRIs, and businesses handling international transactions. Whether you’re an IT professional, a diamond trader, or a returning NRI, maintaining foreign currency balances legally under FEMA regulations can save you money, reduce exchange risks, and provide greater financial flexibility.
Key Takeaways:
- EEFC accounts help exporters hold foreign earnings without immediate conversion.
- RFC accounts are perfect for NRIs returning to India permanently.
- Diamond Dollar Accounts (DDA) are essential for jewelers & diamond exporters.
- Indian residents can also open foreign currency accounts abroad for global transactions.
📥 Download PDF Guide
Click here to download the complete PDF with key notes, tables, and examples from this session: Download Link Here
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