MUMBAI: The Reserve Bank has further liberalised remittances under the LRS (liberalised remittance scheme) via International Financial Services Centres (IFSCs) by allowing remittances for availing of financial services or financial products as well as all current or capital account transactions in any other foreign jurisdiction (other than IFSCs) through an FCA held in IFSCs.
The extant LRS through the IFSCs allows only remittances under investments in IFSCs in securities except those issued by resident entities/companies and for payment of education fees to foreign universities or foreign institutions in IFSCs for pursuing courses mentioned in the gazette notification.
However, the central bank said the revised norms will still be subject to the International Financial Services Centres Authority Act, 2019.
“On a review, it has been decided that authorised persons may facilitate remittances for all permissible purposes under LRS to IFSCs for availing of financial services or financial products as per the IFSCs Authority Act, 2019 within IFSCs; and also for all current or capital account transactions, in any other foreign jurisdiction (other than IFSCs) through an FCA held in IFSCs,” the RBI said. For these purposes, resident individuals can open foreign currency accounts in IFSCs, it added.
Welcoming the decision by RBI, Tapan Ray, MD and Group CEO, GIFT City said, “We at GIFT IFSC welcome the Reserve Bank of India's recent circular expanding the scope of the Liberalised Remittance Scheme (LRS). This decisive move aligns GIFT IFSC with other global financial centers, allowing resident investors to leverage our platform for a wider range of overseas investments and expenditures. By clarifying the use of LRS for investments and enabling transactions like insurance and education loan payments in foreign currency, the RBI has significantly enhanced the attractiveness and utility of GIFT IFSC. We thank the RBI for this progressive step, which will bolster GIFT IFSC’s role as a leading international financial services hub."