General Management · Commercial Services
A software company based in Hyderabad maintains an Exchange Earners' Foreign Currency (EEFC) account. The company argues that it can avoid the mandatory conversion of its foreign currency balances into INR because it has a verified 'future commitment' to pay a foreign collaborator for technical royalty. According to RBI guidelines, is this argument valid, and what procedural step must be taken?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1No, exceptions for future commitments only apply to Resident Foreign Currency (RFC) accounts, not EEFC accounts.
- 2Yes, but only if the company provides satisfactory documentary evidence of the commitment to the Authorized Dealer bank and obtains approval.✓
- 3No, the conversion rule is absolute and does not allow for any exceptions for future commitments under any conditions.
- 4Yes, any declared future commitment allows the company to hold EEFC balances indefinitely without limits.
Correct answer
Yes, but only if the company provides satisfactory documentary evidence of the commitment to the Authorized Dealer bank and obtains approval.
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