- The remittance shall be made only for making investments in IFSCs in securities, other than those issued by entities/companies resident (outside IFSC) in India.
- Resident Individuals can open a non interest bearing Foreign Currency Account (FCA) in IFSCs, for making the investments under LRS.
- Any funds lying idle in the account for a period upto 15 days will be immediately repatriated to domestic INR account of the investor in India.
- Resident Individuals shall not settle any domestic transactions with other residents through these FCAs held in IFSC.
Purpose of the RBI regulation :The decision of the RBI is aimed at deepening the financial markets in the IFSCs and providing an opportunity to resident individuals to diversify their portfolios.
Key Point:
–Any person resident in India (outside IFSC) entering into any transaction with a person/entity in IFSC should be governed by RBI and should adhere to the rules notified under Foreign Exchange Management Act (FEMA), 1999.
Liberalised Remittance Scheme:
LRS is a scheme introduced by RBI as liberalisation measure to facilitate Resident Individuals (RI) to freely remit funds (transfer money to abroad) upto USD 2,50,000/- outside India in a financial year (April to March).
Note – There is no such limit on sending money from other countries to India, It will be based on the particular country regulation.
Recent Related News:
i.In accordance with RBI data, the annual growth (y-o-y) in all-India House Price Index (HPI) remained moderate at 1.1% in Q2FY21 (July-September) as compared to 2.8% in the Q1FY21 and 3.3% in Q2FY20.
ii.On January 11, 2021, Reserve Bank of India (RBI) released the 22nd issue of its bi-annual Financial Stability Report (FSR) 2021. It stated that gross non-performing assets (GNPAs) may rise to 13.5% by September 2021, from 7.5% in September 2020 under the baseline scenario.
About Reserve Bank of India (RBI):
Formation– 1 April 1935
Governor– Shaktikanta Das
Headquarters– Mumbai, Maharashtra
Deputy Governors– 4 (Bibhu Prasad Kanungo, Mahesh Kumar Jain, Michael Debabrata Patra, and M Rajeswar Rao)