Exchange Earners’ Foreign Currency Account (EEFC) is an account maintained in foreign currency with an Authorised Dealer i.e. a bank dealing in foreign exchange. What is the benefit
of maintain an EEFC account by an Indian Exporter / Importer ?

Answer: [B] The account holder does not have to convert foreign exchange into Rupees and vice versa, thereby minimizing the transaction costs

An EEFC account can be held only in the form of a current account. No interest is payable on EEFC accounts. The account holders do not have to convert foreign exchange into Rupees and vice versa, thereby minimizing the transaction costs. There is no restriction on withdrawal in Rupees of funds held in an EEFC account. However, the amount withdrawn in Rupees shall not be eligible for conversion into foreign currency and for re-credit to the account. SEZ Units cannot open EEFC Accounts. The EEFC account balances can be hedged.

This question is a part of GKToday's Integrated IAS General Studies Module