Lesson-4 on Foreign Exchange

Question: Who can open Exporter’s Retention Quota (ERQ) Account ?

Answer: Exporter can open this type of FC account in the name of concern export unit/company.

Question: What is the additional documents required for ERQ Account ?

Answer: Copy of Export Registration Certificate(ERC).

Question: What is the initial deposit required for opening ERQ Account?

Answer: No minimum initial deposit required.

 Question: What are the sources of fund/Quota Entitlement for ERQ Account?

Answer:

Ø    Merchandise exporters can retain upto 50% of repatriated FOB Value of their export.

Ø    Export goods having high import content(low domestic value-added) like POL product including naptha, furnace oil, butimin, Ready made Garments made of imported fabrics, electronics goods etc the exporter can retai up to 10% of repatriated FOB value of export instead of 50% (Garments exporter can retain up to 10% realized FOB value of their export instead of 50%. (Garments exporter can retain up to 10% realized FOB value of their export).

Ø    Service exporter can retain up to 5% of their repatriated income (Indenters/buying House can not open ERQ A/C)

Ø    Soft wear and Data entry /processing exporter can retain up to 40% of their repatriated income.

Ø    Deemed exporter can retain 50% or 10% of repatriated export proceed subject to sharing of direct exporter. (If direct exporter retain 40% or 6%, then the deem exporter will retain balance 10%  or 4% of reptriated export proceed. In this case, the negotiating bank of direct exported will which amount of export proceeds they have retained in ERQ Account.)

Ø    A type industrial unit in EPZ  may retain upto 10% of export proceeds

Ø    B & C type industrial unit may retain upto 80%  if export proceeds other than garments industry.

Ø    C type industrial unit in EPZ may retain upto 75% of export proceeds for garments industry

Question: What are the different utilization of fund in ERQ Accounts

Answer:

Ø    Exporter can use the the fund for bonafide business purpose i.e business visit, participation in export fairs, seminars, setup and maintenance of office abroad

Ø    Payment of import obligation for import of raw materials, Machinery and spare parts etc.

Ø    Payment of International Credit card bill.(International Credit card may be issued in favor of three top executives of concern export firm/organization against ERQ Account

Ø    Exporter can en cash the FC in local currency .

Question: What is the rate of interest against ERQ Account Balance?

Answer:

 AD will pay interest on the ERQ Account at the prescribed rate published by Head Office of a Bank. For availing interest the ERQ balance shall be in the form term deposit. Minimum balance shall be GBP 1,500.00 or equivalent in other eligible currency .

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