What are Escrow accounts insofar as India s international trade is concerned and what is the modus operandi of such accounts?
A. Escrow accounts are US Dollar accounts opened in India. Counter trade proposals involving adjustments of value of goods imported into India against the value of goods exported from India, in terms of an arrangement voluntarily entered into between an Indian party and an overseas party can be routed through an escrow account. All imports and exports under the arrangement should be at international prices and all transactions routed through the account should be in conformity with the Indian Trade and Exchange control regulations. No interest is payable on the balance standing to the credit of the escrow account but the funds temporarily rendered surplus may be held in a short term deposit up to a total period of 3 months in a year and the banks may pay interest at the applicable rate. Overdrafts will not be permitted in the escrow account nor any loans will be granted against funds in the account.
