Current Account vs EEFC vs SNRR Account for Foreign Companies in India

By Sneha Iyer | Updated March 2026

When a foreign company sets up operations in India — whether through a subsidiary, branch office, or liaison office — one of the first practical decisions is which bank accounts to open. India's banking regulations under FEMA offer three distinct account types that foreign companies commonly use: the regular Current Account (for day-to-day INR operations), the EEFC Account (for holding export earnings in foreign currency), and the SNRR Account (for non-residents conducting rupee-denominated business transactions).

The key distinction: a Current Account is for Indian entities doing business in rupees, an EEFC Account is for Indian entities earning in foreign currency, and an SNRR Account is for non-resident persons transacting in rupees without incorporating an Indian entity.

Most Indian subsidiaries of foreign companies maintain a regular Current Account for domestic operations and may add an EEFC Account if they earn export revenue. The SNRR Account is used less commonly — it is designed for non-residents who have business interests in India but do not have an Indian entity (e.g., a foreign company receiving royalties from an Indian licensee, or a non-resident with trade receivables in India).

Quick Comparison Table

Regular Current Account: The Operating Account

Every Indian subsidiary of a foreign company opens a Current Account as its primary operating account. This is where the subsidiary receives payments from Indian customers, pays employee salaries, settles vendor invoices, remits tax payments to the government, and manages day-to-day cash flow.

Key Features for Foreign-Invested Companies

• FDI receipt: The incoming equity investment from the foreign parent is first credited to the subsidiary's Current Account (or a designated FDI account). The subsidiary must file FC-GPR with RBI within 30 days of share allotment.
• Outward remittances: Dividend payments to the foreign parent, royalty payments under technology agreements, and management fee payments are all processed through the Current Account via the Authorised Dealer (AD) bank.
• Tax payments: All tax payments — corporate tax, GST, TDS, professional tax — are debited from the Current Account.
• No FEMA restriction on domestic transactions: The Current Account can be used freely for all domestic INR transactions. FEMA restrictions only apply to cross-border payments (remittances abroad).

Documentation for Opening

Banks typically require: Certificate of Incorporation, MOA and AOA, board resolution authorising account opening, PAN card of the company, KYC documents of all directors and authorised signatories, proof of registered office address, and for foreign-invested companies, the FC-GPR filing acknowledgment or FEMA approval letter.

EEFC Account: Holding Export Earnings in Foreign Currency

Indian subsidiaries that export goods or services — particularly IT/ITES companies, engineering firms, and pharma exporters — can open an EEFC Account to retain their foreign exchange earnings without immediate conversion to INR.

Key Rules

• 100% credit: Account holders can credit 100% of their foreign exchange earnings to the EEFC Account (as permitted by RBI from 1 August 2012).
• Mandatory conversion deadline: The total foreign currency accrual during any month must be converted to INR on or before the last day of the following month, unless the funds are earmarked for specific permitted payments. For example, USD received in March must be converted to INR by April 30, unless needed for an import payment or overseas expense in April.
• Non-interest-bearing: EEFC Accounts are current accounts — no interest is paid on balances. This is a regulatory requirement, not a bank choice.
• Permitted debits: Payments for imports, business travel, overseas advertising, customs duty, payments to other export-oriented units, and any current account transaction under FEMA.
• No capital account transactions: EEFC funds cannot be used for overseas investment, acquisition of foreign assets, or lending abroad without separate RBI approval.

When Indian Subsidiaries Use EEFC

A typical use case: TechServe India Pvt Ltd (subsidiary of TechServe Inc., USA) provides software development services to its US parent and receives monthly payments of USD 500,000. Without an EEFC Account, each payment is converted to INR on receipt — TechServe bears conversion cost and rate risk twice if it also has USD expenses (foreign software licenses, cloud hosting, overseas travel). With an EEFC Account, TechServe credits the USD receipts and uses them directly for permitted USD payments, converting only the balance to INR for domestic expenses.

SNRR Account: For Non-Residents Without an Indian Entity

The Special Non-Resident Rupee (SNRR) Account is the least well-known of the three but serves a critical function: it allows non-resident persons (individuals or foreign companies) to maintain an INR account in India for business transactions without needing to incorporate an Indian entity.

Who Uses SNRR Accounts

• Foreign companies receiving royalties: A US company licensing its technology to an Indian manufacturer can receive royalty payments in an SNRR Account in INR, then convert and repatriate.
• Foreign companies with trade receivables: A German exporter selling machinery to Indian buyers can use an SNRR Account to collect INR payments, accumulate funds, and repatriate periodically.
• Non-resident investors: Foreign investors in Indian securities, bonds, or other permitted instruments can use SNRR for INR-denominated transactions.
• ECB lenders: Foreign lenders providing External Commercial Borrowings in INR can use SNRR to receive interest and principal repayments.

Key Rules

• All permissible current and capital account transactions: Recent RBI amendments removed the earlier restriction to specific listed transactions. SNRR Accounts can now be used for all permissible current and capital account transactions under FEMA.
• Fully repatriable: Unlike NRO accounts which have a USD 1 million annual repatriation cap, SNRR balances are fully repatriable with no ceiling.
• Temporary nature: The account must be closed when the underlying business transaction or activity ends. It is not meant as a permanent banking relationship.
• Inter-account transfers permitted: Recent RBI amendments explicitly allow transfers between SNRR and other repatriable INR accounts (NRE, NRO) for bonafide transactions.
• Pakistan/Bangladesh restriction: Nationals and entities from Pakistan and Bangladesh need prior RBI approval to open an SNRR Account.

Typical Bank Account Structure for Indian Subsidiaries of Foreign Companies

Most Indian subsidiaries of foreign companies maintain the following account structure:

For a straightforward Indian subsidiary that sells domestically and has no export revenue, a single Current Account is sufficient. Add an EEFC Account if the subsidiary exports services or goods. The SNRR Account sits with the foreign parent, not the subsidiary — it is relevant when the parent has INR receivables from India that are not routed through the subsidiary.

Which Should You Choose?

Choose a Regular Current Account if:

• You are an Indian entity (subsidiary, LLP, branch office) conducting business in India
• Your revenue and expenses are primarily in Indian Rupees
• You need a primary operating account for payroll, vendor payments, and tax compliance
• This is your first and essential bank account — every Indian entity needs one

Choose an EEFC Account if:

• Your Indian entity earns foreign exchange through exports of goods or services
• You have upcoming foreign currency expenses (import payments, cloud hosting, overseas travel) and want to avoid double conversion (forex to INR, then INR back to forex)
• You want to retain flexibility on conversion timing — within the end-of-next-month deadline
• Your monthly forex earnings exceed USD 50,000, making the conversion savings meaningful

Choose an SNRR Account if:

• You are a non-resident (foreign company or individual) with business transactions in India
• You receive INR payments from India — royalties, license fees, trade receivables — but do not have an Indian entity
• You want full repatriation with no cap (unlike NRO's USD 1 million limit)
• You need an INR account temporarily for a specific business activity or contract in India

Common Mistakes

• Confusing EEFC with SNRR — they serve opposite purposes: EEFC is for Indian residents holding foreign currency earnings. SNRR is for non-residents holding Indian rupees. If an Indian subsidiary opens what it thinks is a "foreign currency holding account" and requests an SNRR, the bank will reject it — the subsidiary is a resident entity and needs an EEFC.
• Not converting EEFC balances within the deadline: RBI mandates conversion of EEFC balances to INR by the end of the month following the month of credit, unless funds are earmarked for specific payments. Repeated non-compliance can result in the AD bank restricting the EEFC facility and reporting to RBI.
• Using SNRR as a permanent account: SNRR Accounts are designed to be temporary — they must be closed when the underlying transaction ends. Some foreign companies use SNRR as a de facto permanent INR account, which can trigger RBI scrutiny. If you need a permanent banking relationship in India, incorporate a subsidiary and open a Current Account.
• Not opening an EEFC account when the subsidiary exports to its own parent: Many Indian subsidiaries provide IT services, R&D, or back-office services to their foreign parent and receive payments in USD or EUR. These are export earnings eligible for EEFC. By not opening an EEFC, the subsidiary converts all receipts to INR immediately, then converts back to foreign currency when paying for imported software or cloud services — incurring double conversion costs of 0.5-1.5% each way.
• Assuming the foreign parent can open a Current Account in India: A foreign company without an Indian entity (no subsidiary, branch, or liaison office) cannot open a regular Current Account with an Indian bank. The correct option is an SNRR Account for INR transactions or routing payments through the Indian entity's account.

Practical Example

CloudScale AB, a Swedish SaaS company, enters India in three stages. Each stage requires a different banking setup:

Stage 1 — Licensing (no Indian entity): CloudScale licenses its software to Indian enterprises and earns INR 50 lakh annually in license fees. It opens an SNRR Account with HDFC Bank to receive these INR payments. CloudScale converts and repatriates the balance quarterly to its Swedish bank account — approximately SEK 540,000 per quarter. No Indian entity is needed.

Stage 2 — Subsidiary incorporation: CloudScale incorporates CloudScale India Pvt Ltd with INR 1 crore share capital. The subsidiary opens a Current Account with ICICI Bank for daily operations — payroll for 15 employees (INR 25 lakh/month), office rent (INR 3 lakh/month), GST and tax payments. The subsidiary sells to Indian customers in INR — all transactions flow through the Current Account.

Stage 3 — Export services to parent: CloudScale India begins providing software development services to CloudScale AB, earning USD 200,000 per month. It opens an EEFC Account with ICICI Bank. Monthly: USD 200,000 credited to EEFC. CloudScale India uses USD 40,000 directly for AWS hosting, Figma licenses, and overseas travel (permitted debits). The remaining USD 160,000 is converted to INR (approximately INR 1.36 crore) and transferred to the Current Account for salary and domestic expenses. Conversion saving: by using EEFC for the USD 40,000 in foreign expenses, CloudScale India avoids double conversion (USD to INR to USD) saving approximately INR 60,000-90,000 per month (at 0.75-1.0% spread each way).

The SNRR Account (Stage 1) is closed after the subsidiary is incorporated — license fees now flow directly to the subsidiary's Current Account instead.

Key Takeaways

• Every Indian subsidiary needs a regular Current Account for INR operations — it is the primary operating account for payroll, vendor payments, and tax.
• EEFC Accounts allow Indian entities earning foreign currency to retain and use forex without immediate INR conversion, but balances must be converted by the end of the following month.
• SNRR Accounts are for non-residents only — they allow foreign companies to hold INR for business transactions without incorporating an Indian entity.
• EEFC and SNRR serve opposite user bases: EEFC is for residents holding foreign currency, SNRR is for non-residents holding rupees.
• Indian subsidiaries that export to their foreign parent should always open an EEFC Account to avoid double currency conversion costs.
• The typical foreign-invested subsidiary maintains: one Current Account (mandatory), one EEFC Account (if exporting), and the parent may hold an SNRR Account separately for direct India receivables.

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