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The Reserve Bank of India (RBI) has announced significant updates to the Liberalised Remittance Scheme (LRS), enhancing the scope of remittances to International Financial Services Centres (IFSCs). This update aims to provide greater flexibility and opportunities for resident individuals looking to invest or utilise financial services in IFSCs.
Previously, the remittances under LRS to IFSCs were restricted to specific purposes. These included making investments in securities within IFSCs, excluding those issued by entities resident in India outside IFSCs and paying education fees to foreign universities or institutions located in IFSCs, as per the gazette notification dated 23 May 2022.
The latest circular extends the permissible purposes for remittances to IFSCs, now allowing resident individuals to avail a broader range of financial services and products as stipulated by the International Financial Services Centres Authority Act, 2019. Additionally, it permits all current and capital account transactions in foreign jurisdictions through Foreign Currency Accounts (FCAs) held in IFSCs.
This expansion is part of RBI’s continuous efforts to align with global financial practices and support the growing needs of Indian residents engaging in international financial activities.
This move by the RBI is expected to bolster the role of IFSCs in India's financial ecosystem, offering more avenues for investment and financial management to Indian residents.
