An EEFC (Exchange Earner’s Foreign Currency) account was primarily designed for exporters, to make it easy for them to manage their foreign currency transactions. But these days EEFC accounts can be opened by anyone, as long as income is earned in a foreign currency.

Banks authorized by the RBI offer EEFC accounts but with differing terms and conditions. Picking the right EEFC account is thus essential for your ease of doing business. 

In this article, we compare EEFC accounts offered by various banks like HDFC, ICICI, Axis Bank, etc., and help you choose the right one.

What To Look For When Opening an EEFC Account?

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Managing an EEFC account is a lot different than a normal savings account. To begin with, an EEFC is treated like a current account, meaning it earns no interest on the amount of money maintained. Other terms, fees, and charges might be new to those unfamiliar or new to foreign transactions. For a more detailed explanation of EEFC accounts, check out our article on EEFC accounts. For now, here are some key features to consider when comparing EEFC accounts:

Transaction Fees and Charges

Transaction fees and charges are crucial factors to consider when choosing an EEFC account, as they directly impact the cost of managing foreign currency. Common fees associated with EEFC accounts include:

• Fund transfer fees
• Currency conversion fees
• Account maintenance charges
• Inward and outward remittance fees

Different banks will have different fees for each of the above categories. Ideally, you should pick a bank who fees & charges best align with your business transaction patterns. For example, if you don't need to frequently convert foreign currencies, you can pick a bank with high currency conversion charges but lower account maintenance and fund transfer fees.

Foreign Exchange Rates

Competitive Forex rates are essential for maximizing the value of the currency you hold in your EEFC account. According to RBI regulations, you are required to convert the foreign currency held in your account at the end of the month. Banks usually profit from foreign exchange markups, but some more than others. It is important to take this into consideration when opening an EEFC account.

Miscellaneous Services & Benefits

Businesses involved in international trade require specialized benefits and services. These can range from multi-currency exchanges to forex hedging options. Traditional banks are slow to take up these new strategies and may or may not offer such services (discussed below). But ideally, multinational companies would be advised to utilize such services to cut costs.

Comparing Bank Features for the Best EEFC Accounts

EEFC Account Axis Bank

Axis Bank EEFC account is best suited for businesses that deal predominantly in major currencies and seek simplicity in account management.

Pros:

No account maintenance charges

No Monthly Average Balance (MAB) OR Average Quarterly Balance (AQB) Requirement

Cons:

Only works for 4 currencies- USD, GBP, EUR, JAP.

EEFC Account HDFC

HDFC Bank EEFC account is used by companies with diverse international transactions, as it provides support for many of the world's currencies.

Pros:

Available in 21 currencies

Preferential currency conversion rates

Cons:

Possible hidden charges, such as conversion fees or transaction fees are not immediately clear.

EEFC Account ICICI

ICICI Bank provides various convenient features for businesses in foreign currencies. Easy conversion to INR along with forward contracts for reducing currency risk.

Pros:

Works with 24 different currencies

Online currency conversion

FX hedging solutions

Cons:

Higher transaction fees for international transfers compared to some competitors

EEFC Account Induslnd Bank

Along with the general perks associated with an EEFC account, Induslnd Bank offers various financing options, specifically designed for businesses working with foreign currencies.

Pros:

Financing solutions for exporters

9 Currencies Supported

Cons:

Limited currency options compared to some other banks

EEFC Account YES Bank

Pros:

Can be opened in 15+ currencies

Cons:

Card rates apply to foreign exchange transactions below USD 20,000

As you can see, private banks offer largely identical terms when it comes to EEFC accounts, the only major difference being the number of currencies they deal in. Hence, it's better to base your decision on the basis of which bank provides the most convenience in terms of documentation or dedicated relationship managers to manage your EEFC account. 

What are the permissible credits in an EEFC account?

Permissible credits include:

• Inward remittances (excluding foreign currency loans, investments, or specific obligations).
• Payments received by export-oriented units or units in special economic zones for goods sold to similar units or domestic tariff areas.
• Advance remittances for exports.
• Export payments from State Credit repayments.
• Professional earnings (directors' fees, consultancy, etc.).
• Re-credit of unutilized foreign currency.
• Trade-related loan repayments.
• Disinvestment proceeds from ADR/GDR conversions.

What are the permissible debits in an EEFC account?

Permissible debits include:

• Payments for current account transactions 
• Payments for capital account transactions 
• Payments to export-oriented units or units in special economic zones for goods purchased.
• Customs duty payments (as per the Foreign Trade Policy).
• Trade-related loans/advances to importer customers outside India (subject to the Foreign Exchange Management Regulations, 2000).
• Payments to Indian residents for goods/services (including airfare and hotel expenses).

How does Karbon work with international payments?

With Karbon, you gain access to a global network with competitive rates and minimal fees. EEFC accounts are good for receiving money in foreign currencies but Karbon is better at sending money abroad (more than 100+ currencies supported). We offer lower exchange rates than traditional banks while also taking care of a majority of the documentation like FIRC certificate of form 15/CA etc.

Get in touch with us to learn more, thanks for reading.

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