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Govt withdraws interest benefit on EEFC accounts

Govt withdraws interest benefit on EEFC accounts
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First Published: Tue, Aug 05 2008. 10 52 AM IST
Updated: Tue, Aug 05 2008. 10 52 AM IST
By PTI
New Delhi: With the rupee depreciation resulting in gains for exporters, the government has decided to withdraw the benefit under which they earned interest on Exchange Earners’ Foreign Currency (EEFC) accounts from 1November.
An exporter was permitted to earn interest on EEFC accounts to the extent of outstanding balances of $1 million. The measure was valid up to October 31, 2008 subject to review.
“With effect from November 1 2008, all EEFC accounts shall only be permitted to be opened and maintained in the form of non-interest bearing current accounts,” the RBI notification said.
The measure was among the several others extended last year to help exporters battle an over 12% rise in the value of Indian currency in 2007-08.
The government had on 1August announced withdrawal of an interest subvention scheme for exporters from September 30.
Under the interest subvention scheme, exporters were compensated for reduction in profits due to the rupee rise. Exporters got 2% relief in pre-shipment and post-shipment credit in various sectors, especially employment-intensive areas such as handicrafts, textiles, leather and leather products, carpets and marine products.
“Withdrawal of the two will affect exporters substantially, particularly when the benchmark lending rate of the banks have gone up by about 4%,” Federation of Indian Export Organizations (FIEO) president Ganesh Gupta told PTI.
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First Published: Tue, Aug 05 2008. 10 52 AM IST
More Topics: EEFC | RBI | exporters | currency | FIEO |