USD Account in India vs Virtual Foreign Account: What’s the Real Difference for Exporters
What Is a USD Account in India? (EEFC Account Explained)
A USD account in India is a type of Exchange Earners' Foreign Currency (EEFC) account offered by Authorised Dealer (AD) Category I Banks in India. You can hold foreign income in multiple currencies, such as USD, EUR, or GBP, in a single EEFC account without converting it immediately into Indian Rupees (INR).
For example, you received a payment of $5,000 for exported goods on June 16th. You can keep this $5,000 in your EEFC account until the end of the following calendar month, July 31st, before converting it to INR. You can also use this fund to make foreign payments in USD without converting it into INR.
EEFC accounts are governed by the Reserve Bank of India (RBI) regulations to monitor forex risks and give you more flexibility to make international payments directly from your EEFC account.
Who can open a USD account in India?
Is anyone receiving foreign income in India eligible for a USD or EEFC account? Let’s find out in this section
- A freelancer exporting services like design, development, or consulting: A freelancer receiving payments from overseas clients for digital design, web development, or consulting is eligible to open an EEFC account
- A sole proprietor running an agency or boutique service business: Sole proprietors exporting creative, IT, or marketing services can operate an EEFC account. For example, a single-person digital marketing agency providing services to US companies can collect all export payments in USD through an EEFC account.
- A professional like a lawyer, consultant, or content creator earning in foreign currency: Any individual offering professional services, whether legal, consulting, or content creation, can open an EEFC account if they receive foreign currency payments. For example, a content creator is paid by a multinational YouTube partner program for their video channel
- A private limited company, LLP, or partnership engaged in the export of services or goods: Registered businesses, such as private limited companies, LLPs, and partnerships, can open EEFC accounts to manage receipts from exports of services or goods
- An individual receiving payment in USD, EUR, GBP, etc., for exported services (even without GST registration): GST registration is not mandatory for operating an EEFC account. Freelancers, small-scale service providers, or individuals who do not meet the threshold for GST can still open and use an EEFC.
Who cannot open it:
- Entities located in Special Economic Zones (SEZs) cannot open EEFC accounts: The RBI regulations treat SEZs as separate from the Domestic Tariff Area (DTA) for foreign exchange purposes. Instead, SEZ units are allowed to open Resident Foreign Currency (RFC) accounts to manage their international payments. :
- Personal remittance: Individuals receiving personal remittances or gifts not linked to exports or professional services are also not permitted to open EEFC accounts. EEFC accounts are reserved strictly for export or professional foreign exchange earnings, and not for personal transfers or gifts.
Steps to Open an EEFC Account
Step 1: Choose a Bank
Select an Authorised Dealer (AD) Category-I bank such as HDFC, ICICI, Axis, SBI, IndusInd, or DBS. Each bank supports different currencies (e.g., HDFC allows 21).
Step 2: Check Prerequisites:
Some banks require you to already hold a current account (e.g., JK Bank). Confirm eligibility with your chosen bank.
Step 3: Submit Documents:
- Filled EEFC account form
- PAN/Form 60 and KYC documents
- Proof of foreign earnings (invoices, contracts, receipts)
- Business constitution docs (board resolution/partnership deed/proprietorship letter)
- IEC (if applicable)
- NOC from lending banks (if credit facilities exist)
Step 4: Select Currency
Specify USD, EUR, GBP, etc., in the application.
Step 5: Verification & Activation
Bank verifies documents, performs due diligence, and activates the account. Timelines vary by bank.
RBI Rule (Key Compliance)
Foreign currency in your EEFC account cannot be held indefinitely. As per RBI guidelines, any unutilized balance must be converted into INR by the last day of the following month, unless earmarked for approved uses like imports or overseas expenses.
📌 Example: If you receive $10,000 on 11th August, you may keep it in your EEFC account till 30th September. After that, unutilized funds must be converted to INR unless committed for eligible foreign payments.
Pros and Cons of EEFC (USD) Accounts with Indian Banks
| Pros of EEFC Account | Cons of EEFC Account |
| With an EEFC account, you can retain 100% of export earnings in USD. There is no cap on how much money you can hold | You cannot hold the money as long as you wish. RBI makes it mandatory to convert unutilized funds to INR by the last day of the following month |
| Delaying conversion allows you to time your INR conversion more favorably when exchange rates improve | EEFC account opening can be slow due to manual document handling and opaque processes. You might have to keep following up with the bank staff to get updates on the application status |
| You can use the funds in the EEFC account balance to pay international suppliers and save double conversion fees | Some banks have strict documentation and eligibility requirements. Freelancers or small businesses might find it challenging to open and maintain an EEFC account |
| EEFC accounts are fully regulated and compliant with RBI foreign exchange laws | Banks often do not issue Foreign Inward Remittance Advice (FIRA) and Bank Realisation Certificates (eBRC) on their own. You have to notify them separately every time, which adds to the compliance headaches |
What Is a Virtual Foreign Account (USD / Multi-currency)?
So far, we have been talking about managing a USD account through the EEFC. Let’s shift our focus to modern alternatives.
In this section, we explore virtual foreign accounts offered by fintech platforms like Skydo, Wise Business, and Payoneer. These accounts enable exporters and freelancers to receive and manage USD more smoothly compared to traditional banks.
What is a Virtual Foreign Account?
A virtual foreign account allows you to receive USD, EUR, or GBP just like a local in the US, EU or UK. Virtual accounts are like digital addresses with a unique account number that you share with your clients. Once your client makes the payment to a virtual account, the payment is routed locally, like via ACH in the USA or SEPA in Europe. These accounts then collect the payment, convert it into INR, and deposit it into your bank account in less than 48 hours. Licensed fintech platforms, such as Skydo, issue these types of virtual accounts.
Virtual accounts are particularly ideal for freelancers and service exporters because they offer:
- Faster settlements: Payments arrive more quickly compared to traditional international wire transfers.
- No SWIFT or intermediary deductions: Virtual account payments are routed locally. Therefore, the international SWIFT network and intermediary banks are not involved in the transaction, nor are their charges.
- Real-time tracking: Selective payment platforms, like Skydo, allow you to monitor payment status and always stay on top of your payment’s location
- Simplified compliance: Some of these platforms offer free FIRA, which makes the compliance process a lot more effortless for you
Pros and Cons of Virtual USD Accounts
| Pros of virtual USD Account | Cons of virtual USD Account |
| Easy Setup – Accounts can be opened online with digital KYC, saving weeks compared to traditional EEFC/current accounts. | Lack of Control on Conversion Time: Most fintechs (Wise, Payoneer, etc.) don’t allow you to hold USD balances; funds are auto-converted to INR, exposing you to forex markup and timing risks. |
| You get real local bank account details (e.g., US routing number, UK IBAN) so clients pay you like a local without SWIFT or international wire hassles | Restricted Features – Depending on the platform, features like outward remittances, credit facility, support for certain business types may not be available. Enterprises needing these features often still need traditional banking. |
| Lower Costs – Eliminates intermediary bank charges and reduces foreign exchange spread. Many platforms offer flat fees or transparent pricing vs. banks’ hidden 2–4% markups. | Transaction & Currency Limits – Caps exist: e.g., Wise limits $10K per invoice; some platforms only support USD/EUR/GBP and exclude niche currencies exporters may need. |
| Faster Settlement – Payments settle within 24–48 hours (ACH/SEPA rails) vs. 3–7 business days for traditional SWIFT transfers. | Forex Markup: Not all platforms offer mid-market exchange rates. Some platforms may still levy forex markup. |
| Integrated Tools – Many platforms provide invoicing, payment links, and real-time tracking dashboards, simplifying client billing | |
| Accessibility for SMEs – Freelancers and small agencies without strong banking relationships can access global markets easily. |
USD Bank Account vs Virtual Account: Which One’s Right for You?
So, which one is right for your business? EEFC or a Virtual account. Here’s a quick guide to help you decide between the two:
Choose an EEFC Account if:
- You frequently pay vendors, tools, or subscriptions in USD and want to avoid double conversion: EEFC accounts don’t mandate converting USD to INR first. Therefore, when you make frequent payments in USD, the payment is directly deducted. You don’t have to suffer from double currency conversion fees
- You want to hold your earnings in foreign currency and convert when forex rates are favourable: You have time to hold the money till the end of next month and choose the best exchange rate for conversion
- You’re managing large-value transactions and need more control over your forex exposure: EEFC gives you more control over how you want to manage foreign currencies. Moreover, banks also provide tools like forward contracts and hedging against forex risks for large foreign payments
Choose a Virtual Foreign Account if:
- You want faster settlements, minimal paperwork, and easy onboarding — even as a freelancer: Virtual accounts from platforms like Skydo enable you to start accepting foreign payments quickly with simple document submission
- You don't need to hold funds in USD: You're okay with automatic INR conversion at a fair rate.
- You want to avoid SWIFT delays, intermediary deductions, and get better forex rates upfront: These platforms cut out intermediary banks and their hidden fees, and provide transparent, better bank forex rates
- You need built-in compliance like automatic FIRA generation: Virtual account providers automate compliance processes by sharing FIRA after you receive an international payment
In short:
If your priority is forex flexibility and optimising USD payouts, an EEFC account is apt for you. If you value speed, transparency, and automation with minimal hassle, virtual accounts are the right choice.
How Skydo Combines Speed, Simplicity, and RBI Compliance
Skydo empowers Indian exporters, freelancers, agencies, SaaS companies, or consultants with a dedicated virtual USD. These accounts are designed for simplicity and efficiency. You can receive payments directly without SWIFT deductions and benefit from live forex rates that maximize your earnings.
Skydo automatically generates FIRA and, for Amazon Global sellers, an eBRC too. Compliance becomes easy, and there’s no need for manual reconciliation or chasing banks. Moreover, the amount is credited to your Indian bank account within 48 hours. In a nutshell, Skydo helps you get paid faster with the best conversion value while staying compliant with the compliance norms.
What is the purpose of an EEFC account?
An EEFC account lets foreign exchange earners, such as exporters, hold their foreign currency earnings in a bank without immediate conversion to INR. This reduces transaction costs and guards them against currency fluctuations
Which type of account can be opened under EEFC?
Are virtual accounts safe?Are virtual accounts safe?
