Reserve Bank of India proposes ₹50 lakh limit on foreign remittances

According to a report by The Hindu, the Reserve Bank of India (RBI) has submitted a proposal to tighten the rules regarding foreign remittances. Under this proposal, the Ministry of Finance has been suggested to set a sub-limit of ₹50 lakh for certain types of transactions within the Liberalised Remittance Scheme (LRS). The primary objective of this move is believed to be the prevention of large-scale outflow of foreign currency, namely the dollar, from the country.

As per the current arrangement, Indian citizens can remit up to $2,50,000 in a financial year for purposes such as travel, education, medical treatment, and foreign investment, which is valued at more than ₹2 crore. A change to this limit is being considered by the Reserve Bank.

The Liberalised Remittance Scheme (LRS) is an important scheme under the Foreign Exchange Management Act (FEMA). This scheme was implemented by the Reserve Bank in the year 2004. It covers both capital account and current account transactions. Under the capital account, Indian citizens are permitted to open foreign currency bank accounts abroad, purchase property, provide interest-free loans for up to one year, as well as invest in foreign equity, mutual funds, and listed debt securities.

The Liberalised Remittance Scheme (LRS) is a facility introduced by the Reserve Bank of India in the year 2004. The objective of this scheme was to provide ease to Indian residents in conducting financial transactions abroad. Under this scheme, limits for foreign investment and expenditure at an individual level were determined, which millions of Indians have been using for education and other personal needs. Now, an attempt is being made to maintain financial stability by amending the structure of this scheme.