Latest news with #LiberalisedRemittanceScheme
Time of India
6 days ago
- Business
- Time of India
Strict checks coming in! RBI to tighten rules for overseas remittances by resident Indians; here's what is being planned
The RBI's Liberalised Remittance Scheme (LRS) governs foreign investments by individuals. (AI image) The Reserve Bank of India intends to strengthen regulations concerning international money transfers, that is, overseas remittances by Indian residents, with new restrictions on foreign currency deposits that involve lock-in periods. The RBI's Liberalised Remittance Scheme (LRS) governs foreign investments by individuals, permitting resident Indians to send up to $250,000 annually for various purposes, including overseas education, travel, investment in equity and debt instruments, and healthcare services. The RBI will modify its guidelines to stop international transfers from being utilised to deposit funds in overseas interest-bearing accounts or time deposits, an official told Reuters. "This is akin to passive wealth shifting, which is a red flag for the RBI in a still-controlled capital regime," noted the official. India's conservative approach towards increasing outward remittances and complete rupee convertibility is evident in these proposed modifications, as officials work to protect forex reserves and control currency fluctuations, according to the sources. The central bank, whilst in talks with the government, intends to implement measures preventing such deposits from being made under different nomenclatures, as per the second source. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like What She Did Mid-Air Left Passengers Speechless medalmerit Learn More Undo Also Read | Rs 4.58 crore siphoned off from customer accounts, FDs! How former ICICI Bank relationship manager pulled off a stunning fraud - explained in 10 points The initiative aims to streamline regulations within the scheme's legal structure, aligning with the central bank's stated objectives in its yearly report. According to RBI statistics, individual residents' outward remittance deposits increased significantly to $173.2 million in March, up from $51.62 million in February. March traditionally sees heightened outward remittances as residents seek to utilise their yearly allowances and manage tax implications. Whilst it remains the scheme's peak period under LRS, the RBI has expressed concerns about potential passive fund parking. The total outward remittances under the scheme for the financial year 2024/25 showed a slight decrease but maintained substantial levels at approximately $30 billion, compared to $31 billion in the previous year. The outbound transfers from India through the programme have shown consistent growth, especially with fintech companies and private banking institutions facilitating international investments for individual investors. Also Read | Remittances tax: How Donald Trump's 'The One Big Beautiful Bill' may turn out to be ugly for Indians in the US "The move addresses a growing misuse of the scheme as a vehicle for passive capital export," according to the second official. "It also aligns the scheme more closely with India's calibrated approach to capital account convertibility." India maintains a prudent stance regarding unrestricted outward flows, primarily to safeguard its forex reserves and regulate currency fluctuations. The updated regulations will not impact authorised foreign investments in shares, mutual funds or real estate under the LRS, as confirmed by the second official. Stay informed with the latest business news, updates on bank holidays and public holidays . AI Masterclass for Students. Upskill Young Ones Today!– Join Now
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Business Standard
12-06-2025
- Business
- Business Standard
No lock-in FDs abroad: RBI set to tighten overseas remittance rules
Reserve Bank of India plans to block overseas fixed deposits under Liberalised Remittance Scheme to curb misuse, protect forex reserves, and prevent passive capital flight by resident Indians The Reserve Bank of India (RBI) is preparing to tighten rules on overseas remittances by resident Indians, aiming to stop them from parking money in foreign currency deposits with lock-in periods, Reuters reported. The central bank plans to amend the Liberalised Remittance Scheme (LRS) to block the use of funds sent abroad for fixed deposits or other interest-earning accounts. 'This is akin to passive wealth shifting, which is a red flag for the RBI in a still-controlled capital regime,' a source told Reuters. The move comes amid rising concerns over growing outward remittances and India's cautious approach toward full capital account convertibility. RBI officials are worried that some individuals may be using the LRS route to quietly move money overseas, which could affect foreign exchange reserves and increase currency volatility. Currently, the LRS allows resident Indians to send up to $250,000 abroad in a financial year for purposes like education, travel, investments in foreign stocks or bonds, and medical treatment. Sources said the RBI also wants to close any loopholes that may allow such deposits to be made under different names or through indirect routes. 'The move addresses a growing misuse of the scheme as a vehicle for passive capital export,' said a second source. This proposed change is part of a broader effort to simplify and strengthen the legal framework around overseas remittances. The RBI had highlighted this as a priority in its latest annual report. Data from the central bank shows that foreign currency deposits made by resident individuals surged from $51.62 million in February to $173.2 million in March 2025. Experts say March typically sees a spike in remittances, as people try to make full use of their annual limits and plan for taxes before the financial year ends. Although total outward remittances dipped slightly in FY25 to nearly $30 billion from $31 billion in FY24, the figure remains historically high. The exact amount currently held in foreign fixed deposits is unknown, but officials described the proposed move as 'preventative'. In recent years, the growing use of fintech apps and support from private banks has made it easier for Indians to invest globally, contributing to the steady rise in remittances. 'It also aligns the scheme more closely with India's calibrated approach to capital account convertibility,' the second source added. Notably, the revised rules will not affect genuine foreign investments allowed under LRS, such as buying stocks, mutual funds, or property abroad, the source clarified.
India Today
12-06-2025
- Business
- India Today
India to tighten remittance rules, bar offshore time deposits: Report
India's central bank plans to tighten rules for overseas remittances by resident Indians, barring them from holding foreign currency deposits with lock-in periods, two government sources Reserve Bank of India (RBI) will amend regulations to prevent overseas transfers from being used to park money in time deposits or other interest-bearing accounts abroad, one of the sources said."This is akin to passive wealth shifting, which is a red flag for the RBI in a still-controlled capital regime," the first source familiar with the thinking of the central bank The proposed changes reflect India's cautious stance on a rise in outward remittances and full convertibility of the rupee, as authorities strive to safeguard foreign exchange reserves and manage currency volatility, the sources investments by individuals fall under the central bank's Liberalised Remittance Scheme (LRS) — which allows resident Indians to remit up to $250,000 in a single year — for purposes ranging from foreign education, travel, equity and debt investments to medical discussions with the government are ongoing, the RBI aims to ensure such deposits cannot be made even under alternate names, the second source sources declined to be identified due to the confidentiality of the talks. The finance ministry and the RBI did not respond to emailed requests for move is part of a comprehensive review of the legal framework governing the scheme to simplify the regulations, a priority highlighted by the central bank in its annual data showed that deposits under outward remittances by resident individuals rose sharply to $173.2 million in March from $51.62 million in remittances typically spike in March as it allows residents to maximise their annual limits and optimise taxes, making it the busiest month under LRS but the RBI is concerned that a portion of this may be getting passively financial year 2024/25, total annual outward remittances under the scheme dipped but remained high at nearly $30 billion compared with $31 billion a year sources did not disclose the amount currently held in foreign currency deposit accounts, but said the move is "preventative".India's outward remittances under the scheme have steadily increased, particularly as fintech platforms and private banks have made global investing easier for retail investors."The move addresses a growing misuse of the scheme as a vehicle for passive capital export," the second source said."It also aligns the scheme more closely with India's calibrated approach to capital account convertibility."India has remained cautious on allowing unrestricted outflows, partly to preserve its foreign exchange reserves and manage currency revised rules will not affect permissible foreign investments in equities, mutual funds or property under the LRS, the second source said.
Khaleej Times
12-06-2025
- Business
- Khaleej Times
India to tighten remittance rules, bar offshore time deposits, sources say
India's central bank plans to tighten rules for overseas remittances by resident Indians, barring them from holding foreign currency deposits with lock-in periods, two government sources said. The Reserve Bank of India (RBI) will amend regulations to prevent overseas transfers from being used to park money in time deposits or other interest-bearing accounts abroad, one of the sources said. "This is akin to passive wealth shifting, which is a red flag for the RBI in a still-controlled capital regime," the first source familiar with the thinking of the central bank said. The proposed changes reflect India's cautious stance on a rise in outward remittances and full convertibility of the rupee, as authorities strive to safeguard foreign exchange reserves and manage currency volatility, the sources said. Overseas investments by individuals fall under the central bank's Liberalised Remittance Scheme (LRS) — which allows resident Indians to remit up to $250,000 in a single year — for purposes ranging from foreign education, travel, equity and debt investments to medical treatments. While discussions with the government are ongoing, the RBI aims to ensure such deposits cannot be made even under alternate names, the second source said. Both sources declined to be identified due to the confidentiality of the talks. The finance ministry and the RBI did not respond to emailed requests for comment. The move is part of a comprehensive review of the legal framework governing the scheme to simplify the regulations, a priority highlighted by the central bank in its annual report. RBI data showed that deposits under outward remittances by resident individuals rose sharply to $173.2 million in March from $51.62 million in February. Outward remittances typically spike in March as it allows residents to maximise their annual limits and optimise taxes, making it the busiest month under LRS but the RBI is concerned that a portion of this may be getting passively parked. For financial year 2024/25, total annual outward remittances under the scheme dipped but remained high at nearly $30 billion compared with $31 billion a year ago. The sources did not disclose the amount currently held in foreign currency deposit accounts, but said the move is "preventative". India's outward remittances under the scheme have steadily increased, particularly as fintech platforms and private banks have made global investing easier for retail investors. "The move addresses a growing misuse of the scheme as a vehicle for passive capital export," the second source said. "It also aligns the scheme more closely with India's calibrated approach to capital account convertibility." India has remained cautious on allowing unrestricted outflows, partly to preserve its foreign exchange reserves and manage currency volatility. The revised rules will not affect permissible foreign investments in equities, mutual funds or property under the LRS, the second source said.
Yahoo
12-06-2025
- Business
- Yahoo
India to tighten remittance rules, bar offshore time deposits, sources say
By Shubham Batra MUMBAI (Reuters) -India's central bank plans to tighten rules for overseas remittances by resident Indians, barring them from holding foreign currency deposits with lock-in periods, two government sources said. The Reserve Bank of India (RBI) will amend regulations to prevent overseas transfers from being used to park money in time deposits or other interest-bearing accounts abroad, one of the sources said. "This is akin to passive wealth shifting, which is a red flag for the RBI in a still-controlled capital regime," the first source familiar with the thinking of the central bank said. The proposed changes reflect India's cautious stance on a rise in outward remittances and full convertibility of the rupee, as authorities strive to safeguard foreign exchange reserves and manage currency volatility, the sources said. Overseas investments by individuals fall under the central bank's Liberalised Remittance Scheme (LRS) — which allows resident Indians to remit up to $250,000 in a single year — for purposes ranging from foreign education, travel, equity and debt investments to medical treatments. While discussions with the government are ongoing, the RBI aims to ensure such deposits cannot be made even under alternate names, the second source said. Both sources declined to be identified due to the confidentiality of the talks. The finance ministry and the RBI did not respond to emailed requests for comment. The move is part of a comprehensive review of the legal framework governing the scheme to simplify the regulations, a priority highlighted by the central bank in its annual report. RBI data showed that deposits under outward remittances by resident individuals rose sharply to $173.2 million in March from $51.62 million in February. Outward remittances typically spike in March as it allows residents to maximise their annual limits and optimise taxes, making it the busiest month under LRS but the RBI is concerned that a portion of this may be getting passively parked. For financial year 2024/25, total annual outward remittances under the scheme dipped but remained high at nearly $30 billion compared with $31 billion a year ago. The sources did not disclose the amount currently held in foreign currency deposit accounts, but said the move is "preventative". India's outward remittances under the scheme have steadily increased, particularly as fintech platforms and private banks have made global investing easier for retail investors. "The move addresses a growing misuse of the scheme as a vehicle for passive capital export," the second source said. "It also aligns the scheme more closely with India's calibrated approach to capital account convertibility." India has remained cautious on allowing unrestricted outflows, partly to preserve its foreign exchange reserves and manage currency volatility. The revised rules will not affect permissible foreign investments in equities, mutual funds or property under the LRS, the second source said.
