The scheme allows individuals to send up to $250,000 abroad annually. Previously, LRS transfers to International Financial Services Centres (IFSCs) were restricted to investing in securities within IFSCs, excluding Indian companies, and paying education fees to foreign institutions within IFSCs.
In a notification released on July 10, India’s central bank said, “On a review, it has been decided that Authorised Persons may facilitate remittances for all permissible purposes under LRS to IFSCs for:
Availing financial services or financial products as per the International Financial Services Centres Authority Act, 2019 within IFSCs; and all current or capital account transactions, in any other foreign jurisdiction (other than IFSCs) through an FCA held in IFSCs. For these permissible purposes, resident individuals can open Foreign Currency Account (FCA) in IFSCs.”
An IFSC functions as a jurisdiction for foreign currency business, regarded as an international financial hub for regulatory purposes. The RBI has broadened the scope of LRS remittances to include deposits, property purchases, equity and debt investments, gifts, donations, travel, maintenance of relatives, medical treatment, and studying abroad.
This change permits Indian residents to open fixed deposit accounts in dollars at GIFT IFSC, offering protection against inflation and currency depreciation.
Naveen Mathur, Director – Anand Rathi International Ventures (IFSC), spoke to CNBC-TV18 about a recent notification and described it as a positive development.
Mathur highlighted that this change enables a broader range of uses for remittances through GIFT City IFSC accounts. Individuals can now send gifts abroad, purchase immovable properties, buy insurance, and make fixed deposits in foreign currency accounts, providing benefits like hedging against inflation and protection from US dollar depreciation.
He praised the move by the Reserve Bank of India (RBI), noting it as a significant step forward for GIFT-IFSC compared to other international financial services centers globally.
