Latest news with #ShubhamBatra
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.
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.
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.
Yahoo
26-05-2025
- Business
- Yahoo
India's central bank seeks approval for overseas rupee lending to neighbours, sources say
By Shubham Batra NEW DELHI (Reuters) -India's central bank is taking another step to internationalise the rupee, seeking approval to allow domestic banks to lend the currency to overseas borrowers for the first time, two sources said. The Reserve Bank of India (RBI) has asked the federal government to allow domestic banks and their foreign branches to lend Indian rupees to overseas borrowers to enhance the use and acceptability of the local currency in trade. The proposal, which was sent to the finance ministry last month, suggests lending in rupees to non-residents can begin in neighbouring countries such as Bangladesh, Bhutan, Nepal and Sri Lanka, the sources said. If successful, such rupee-denominated lending could be extended to cross-border transactions globally, one of the sources said. According to Ministry of Commerce data, 90% of India's exports to South Asia were to these four nations in 2024/25, amounting to nearly $25 billion. Currently, foreign branches of Indian banks are restricted to providing loans in foreign currencies and such loans are extended mainly to Indian firms. The sources declined to be identified as the discussions are confidential. Emails sent to the Finance Ministry and the RBI requesting comment did not receive a response. The central bank has been taking steps to increase the use of the local currency in global trade and investment. As part of the strategy, RBI recently permitted the opening of rupee accounts for non-residents outside India. Earlier this month, Reuters reported the RBI has sought government's approval to remove the cap on foreign banks with so-called vostro accounts buying short-term sovereign debt, to boost rupee-denominated investment and trade. The RBI will open the foreign loans in rupees only for the purpose of trade, the sources said. Currently, rupee liquidity is provided in other countries only through a limited number of government-backed credit lines or bilateral currency swap arrangements. "The objective is to reduce dependence on such arrangements and instead allow commercial banks to provide rupee liquidity on market terms," the first source said, citing a communication from the central bank in April. The second source said enabling easier access to rupee-denominated loans will help facilitate trade settlements in rupees and reduce exposure to foreign exchange volatility. The government has received several requests from financial institutions to support strategic projects through rupee-denominated financing, the second source said. India's experience with local currency pacts with the United Arab Emirates, Indonesia, and the Maldives, as well as Special Rupee Vostro Accounts used for trade with Sri Lanka and Bangladesh, has underscored the need to deepen the availability of rupee liquidity, the source said. If implemented, the policy would mark a major step toward integrating the rupee into the global financial system, positioning it as a more widely accepted currency for international trade and investment, the second source added.
Yahoo
26-05-2025
- Business
- Yahoo
India's central bank seeks approval for overseas rupee lending to neighbours, sources say
By Shubham Batra NEW DELHI (Reuters) -India's central bank is taking another step to internationalise the rupee, seeking approval to allow domestic banks to lend the currency to overseas borrowers for the first time, two sources said. The Reserve Bank of India (RBI) has asked the federal government to allow domestic banks and their foreign branches to lend Indian rupees to overseas borrowers to enhance the use and acceptability of the local currency in trade. The proposal, which was sent to the finance ministry last month, suggests lending in rupees to non-residents can begin in neighbouring countries such as Bangladesh, Bhutan, Nepal and Sri Lanka, the sources said. If successful, such rupee-denominated lending could be extended to cross-border transactions globally, one of the sources said. According to Ministry of Commerce data, 90% of India's exports to South Asia were to these four nations in 2024/25, amounting to nearly $25 billion. Currently, foreign branches of Indian banks are restricted to providing loans in foreign currencies and such loans are extended mainly to Indian firms. The sources declined to be identified as the discussions are confidential. Emails sent to the Finance Ministry and the RBI requesting comment did not receive a response. The central bank has been taking steps to increase the use of the local currency in global trade and investment. As part of the strategy, RBI recently permitted the opening of rupee accounts for non-residents outside India. Earlier this month, Reuters reported the RBI has sought government's approval to remove the cap on foreign banks with so-called vostro accounts buying short-term sovereign debt, to boost rupee-denominated investment and trade. The RBI will open the foreign loans in rupees only for the purpose of trade, the sources said. Currently, rupee liquidity is provided in other countries only through a limited number of government-backed credit lines or bilateral currency swap arrangements. "The objective is to reduce dependence on such arrangements and instead allow commercial banks to provide rupee liquidity on market terms," the first source said, citing a communication from the central bank in April. The second source said enabling easier access to rupee-denominated loans will help facilitate trade settlements in rupees and reduce exposure to foreign exchange volatility. The government has received several requests from financial institutions to support strategic projects through rupee-denominated financing, the second source said. India's experience with local currency pacts with the United Arab Emirates, Indonesia, and the Maldives, as well as Special Rupee Vostro Accounts used for trade with Sri Lanka and Bangladesh, has underscored the need to deepen the availability of rupee liquidity, the source said. If implemented, the policy would mark a major step toward integrating the rupee into the global financial system, positioning it as a more widely accepted currency for international trade and investment, the second source added. Sign in to access your portfolio
