Direct answer: Diamond Dollar Accounts are a restricted USD current-account facility for eligible firms and companies, not a general foreign-currency treasury account. Establish current Foreign Trade Policy eligibility, the five-account ceiling, other-account restrictions and permitted transaction types before opening or using one.
Checked on 23 October 2026 against DGFT’s 2026 revised Chapter 4 of the Foreign Trade Policy, paragraph 4.50, the July 2026 Handbook of Procedures, paragraph 4.91, FEMA 10(R), regulation 4(E) and Schedule II and RBI’s Deposits and Accounts Master Direction, paragraph 3.4, updated 2 September 2026. This guide concentrates on eligibility, account inventory and supported USD flows; it does not reproduce a generic EEFC-account working.
Use current policy eligibility rather than an old application sentence
The current FTP paragraph covers its specified diamond, gemstone and jewellery businesses, with at least three years’ relevant import/export track record and average annual turnover of ₹3 crore or more during the preceding three licensing years. Verify the exact product and activity scope against the paragraph; a business that merely receives dollars is not thereby eligible.
The older application annexed to RBI’s account regulations still contains a two-year track-record description. The operative regulation and Schedule II require compliance with FTP criteria in force from time to time. Prepare the application using the current three-year FTP test, supported by the bank’s current requirements, rather than relying on that older specimen to bypass it.
Reconcile the three-year average and the legal applicant
Retain year-wise turnover support and a consistent basis tied to the applicant’s accounts and relevant trade records. An average test is not a requirement that every one of the three years independently exceeds ₹3 crore. Conversely, one strong year does not eliminate the other years from the denominator. Do not combine related companies’ turnover to pass the applicant’s test without a lawful basis.
Schedule II requires the account in the exporter’s name, in USD, as a non-interest-bearing current account. It caps the exporter firm or company at five DDAs and prohibits transfers between that holder’s DDAs. Maintain an inventory across banks; a different branch does not automatically create a new five-account allowance.
Check other foreign-currency accounts before applying
Schedule II excludes firms or companies maintaining foreign-currency accounts, other than EEFC accounts, with banks in India or abroad from DDA eligibility. Obtain a complete account declaration and resolve any conflicting account before treating the DDA application as eligible. The EEFC exception does not make every other account type permissible.
| Control | Supporting record | Typical exception |
|---|---|---|
| Applicant eligibility | Current FTP scope and three-year track record | Old two-year specimen used without current-policy check. |
| Account inventory | DDA and other foreign-currency accounts across banks | Sixth DDA or conflicting non-EEFC account. |
| USD flow | Underlying finance, sale, purchase or conversion documents | Unrelated receipt or prohibited DDA-to-DDA transfer. |
Match each credit and debit to the permitted route
Schedule II lists credits including USD pre/post-shipment finance, specified export proceeds and USD local diamond sales. Its debit list covers specified purchases, permitted gold transactions, repayment of bank USD loans and transfer to the exporter’s rupee account, subject to FTP. Bank finance should remain identifiable as borrowing rather than being counted again as turnover or export realisation.
A general expense or investment proposal does not become an authorised DDA debit merely because sufficient dollars exist. Identify the listed route and underlying evidence with the AD bank. This analysis neither grants customs relief nor determines GST or income-tax treatment of a local USD sale.
Keep recurring eligibility and balance controls active
Schedule II calls for the AD bank to assess track record at the end of each April–March licensing year and addresses account closure if eligibility is not met. RBI’s current master direction also requires monthly accruals to be converted into rupees by the end of the succeeding calendar month after permitted utilisation or forward-commitment adjustments. Keep that conversion working alongside, rather than instead of, the eligibility file.
The October 2026 export/import framework also matters for the underlying trade transaction. Do not revive an older export circular’s reporting process solely because it mentions DDA. This article supplies account controls, not a replacement for current shipment, realisation or AD-bank reporting requirements.
The six illustrations assume the applicant’s product scope and all other conditions are met unless a stated exception prevents that conclusion. USD/INR 83.40 is a fictional conversion input, not a quoted market rate. The account-flow examples do not calculate taxable income or statutory export incentives.
Worked illustrations
These illustrations use fictional facts and expressly stated assumptions. Amounts are Indian rupees unless a different currency or unit is specified. They are independent examples, not findings about any actual client.
Illustrative example 1: An average exactly at the threshold
Supported annual turnovers for the preceding three licensing years are ₹2.40 crore, ₹3.00 crore and ₹3.60 crore. Their sum is ₹9.00 crore and average ₹3.00 crore, meeting the numerical threshold. The ₹2.40 crore year does not alone fail an average test, but the separate three-year relevant track record and other conditions still require evidence.
Illustrative example 2: One high year cannot replace the average
Turnovers of ₹1.50 crore, ₹2.00 crore and ₹5.20 crore total ₹8.70 crore. The three-year average is ₹2.90 crore, ₹0.10 crore below the ₹3.00 crore threshold. Counting only the ₹5.20 crore year would conceal the shortfall.
Illustrative example 3: A fresh account request breaches the holder-wide ceiling
An eligible firm maintains two DDAs at Bank A and two at Bank B and proposes two more at Bank C. Proposed total is six, exceeding the five-account ceiling by one. With four current DDAs, numerical headroom is one account, not another bank-specific block of five.
Illustrative example 4: Separate permitted credit sources
An eligible account receives USD 80,000 of supported export proceeds, USD 20,000 of permitted local diamond-sale proceeds and USD 50,000 of qualifying shipment finance. Total credits are USD 150,000. The USD 50,000 finance must remain tagged as borrowing; presenting USD 150,000 as export proceeds would overstate that source by USD 70,000.
Illustrative example 5: Reconcile purchases and a rupee transfer
A DDA contains USD 150,000. Supported permitted rough-diamond purchases use USD 60,000 and a permitted bank USD-loan repayment uses USD 30,000. Balance is USD 60,000. A USD 20,000 transfer to the exporter’s rupee account at an assumed 83.40 gives ₹16,68,000 before charges and leaves USD 40,000. This numerical bridge does not authorise retention beyond the applicable conversion requirements.
Illustrative example 6: A transfer between DDAs is not justified by a matching total
The holder has USD 30,000 in DDA 1 and USD 10,000 in DDA 2. A proposed USD 5,000 transfer would leave USD 25,000 and USD 15,000, with the same aggregate USD 40,000. Despite the balanced arithmetic, Schedule II prohibits that inter-DDA transfer. Use a permitted route agreed with the AD bank rather than approving it because the consolidated balance is unchanged.
Ten-step verification table
| Step | Verification | Evidence to retain |
|---|---|---|
| 1 | Identify the applicant and relevant diamond/jewellery activity. | IEC, constitution and product/activity records. |
| 2 | Verify the current FTP track-record requirement. | Three-year relevant import/export evidence. |
| 3 | Compute the preceding three licensing years’ average turnover. | Year-wise accounts and supported reconciliation. |
| 4 | Resolve differences from older application wording. | Current FTP extract and AD-bank application requirements. |
| 5 | Inventory DDAs across all banks. | Holder-wide count and proposed opening/closure list. |
| 6 | Identify other foreign-currency accounts and the EEFC exception. | Complete account declaration and conflict resolution. |
| 7 | Confirm USD non-interest-bearing current-account terms. | Bank opening letter and account terms. |
| 8 | Map each credit to a permitted source. | Shipment-finance, export and local-sale evidence. |
| 9 | Map each debit to a permitted use and block inter-DDA transfers. | Purchase, loan-repayment and conversion documents. |
| 10 | Maintain year-end eligibility and monthly conversion controls. | AD review file and accrual/utilisation/commitment working. |
Sixteen practitioner FAQs
1. Is a DDA available to every exporter?
No. Establish the specified FTP business scope and remaining account conditions.
2. What track record does the current FTP paragraph require?
The verified 2026 revised paragraph 4.50 uses at least three years of relevant import/export track record.
3. Why does an older RBI specimen mention two years?
It is older application wording. The operative account scheme points to FTP eligibility in force from time to time; do not use the specimen to bypass current policy.
4. Is ₹3 crore required in every individual year?
The FTP uses the average annual turnover during the preceding three licensing years. Keep the separate track-record condition visible.
5. Can related entities’ turnovers automatically be pooled?
Do not assume that. Establish eligibility for the actual applicant on a supported lawful basis.
6. Can the account be maintained in euros?
The DDA scheme specifies USD.
7. Is a DDA an interest-bearing term deposit?
No. Schedule II specifies a non-interest-bearing current account.
8. Does each bank allow a separate five DDAs?
The ceiling concerns the exporter firm or company. Maintain the account count across banks.
9. Can existing EEFC accounts alone disqualify the applicant?
Schedule II expressly excepts EEFC accounts from the stated other-foreign-currency-account restriction.
10. Can another foreign-currency account be ignored because it has a small balance?
Do not ignore it. Resolve the scheme’s account-eligibility restriction with the AD bank.
11. Can money move directly between the holder’s DDAs?
Schedule II prohibits transfers between those DDAs; matching consolidated balances do not cure the restriction.
12. Is shipment finance export turnover?
Keep borrowing credits distinct from sale proceeds and from the turnover used in the eligibility working.
13. Can local diamond sales be relevant credits?
The scheme permits the specified local-sale realisations in USD. Retain the exact goods and transaction evidence.
14. Does a dollar balance permit any business expense?
No. Match the debit to a permitted route and other applicable trade requirements.
15. Is eligibility checked only when opening?
Schedule II provides for AD-bank track-record assessment at each licensing year-end and addresses failure to meet eligibility.
16. Can DDA balances be retained without any conversion review?
No. The current RBI master direction includes the monthly-accrual conversion requirement, subject to its permitted adjustments.
Working-paper organisation
Keep the source documents, calculation and final conclusion together for the same entity and period. If using assurePractice or other assureOffice tools, use only confirmed available functions and retain this evidence with the output.
Conclusion
Use the current FTP eligibility test and a holder-wide account inventory before opening a DDA. Keep each dollar flow tied to its permitted purpose and preserve both year-end and monthly controls.