The Reserve Bank of India (RBI) has recently announced changes to the Liberalised Remittance Scheme (LRS). This update is outlined in Circular No. 15 dated July 10, 2024, which focuses on expanding the use of International Financial Service Centres (IFSCs). These changes open up new avenues for resident individuals to engage in international financial transactions.
Previously, the use of IFSCs under the LRS was limited to investments in certain securities and payment of fees for specific educational courses at foreign universities. The new regulations, however, have broaden the scope. Resident Individuals can now use IFSCs to access a variety of financial services and products in line with the International Financial Services Centres Authority Act, 2019. This includes the ability to conduct both current and capital account transactions in foreign jurisdictions through Foreign Currency Accounts (FCAs) held in IFSCs.
This expansion allows resident individuals to open FCAs in IFSCs and use them for diverse purposes, such as making payments for goods or services and investing in foreign markets. The move is expected to enhance the attractiveness of GIFT City, potentially establishing it as a major international financial hub.
It's important to note that while these changes offer more freedom in international transactions, they still fall under the broader LRS framework. Authorized Persons are instructed to facilitate these remittances and inform their customers about these new options. The RBI emphasizes that these directions are issued under sections 10(4) and 11(1) of the Foreign Exchange Management Act, 1999, and do not override any other legal requirements or approvals that may be necessary.
For any queries, clarifications, or comments, you may contact the authors below:
Comentarios