The exporter/beneficiary of a foreign exchange remittance has the choice that he may retain up to 25% of the value of the bill/remittance in foreign currency itself to be used by him for making payment in foreign exchange for any approved purposes. The retention can be up to 50% in the case of units in export processing zones and 100% export-oriented units.
The amount so retained shall be credited to the Exchange Earner’s Foreign Currency (EEFC) Account of the exporter with the bank. Where a part of the bill value/remittance is retained in foreign exchange, the exchange rate will be applied and the value converted into rupees only for the balance amount. The EEFC account will be credited with the amount retained only on realization of the bill.
Normal transit period in purchase of export bills:
In case of export bills negotiated/purchased by the bank, the time lag expected from the date of purchase of the bill and its presentation to the drawee abroad, its payment by the drawee and credit of proceeds to the nostro account of the collecting bank is known as the normal transit period.
The normal transit period for different destinations has been prescribed by FEDAI. Banks are expected to charge interest on the export bills negotiated/purchased for the normal transit period plus usance of the bill.