RBI allows resident Indians to open Foreign Currency Accounts in IFSC, Gujarat

Currently remittances under LRS to IFSCs are permitted only for making investments in IFSCs in securities except those issued by entities/companies resident in India (outside IFSC)

Updated - July 11, 2024 11:23 am IST

Published - July 11, 2024 10:41 am IST

The Reserve Bank of India (RBI) seal is pictured on a gate outside the RBI headquarters in Mumbai.File

The Reserve Bank of India (RBI) seal is pictured on a gate outside the RBI headquarters in Mumbai.File | Photo Credit: Reuters

The Reserve Bank of India (RBI) in a notification issued on Wednesday evening allowed resident individuals to open Foreign Currency Account (FCA) in International Financial Services Centres (IFSCs) at GIFT City in Gujarat under the Liberalised Remittance Scheme (LRS).

“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,” the RBI said in the notification.

“Authorised Persons shall bring the contents of this circular to the notice of their constituents and customers,” it added.

Authorised persons are those authorised by the RBI to provide forex services such as banks and specific FX dealers as such transactions will be routed through the banking system.

Currently remittances under LRS to IFSCs are permitted only for making investments in IFSCs in securities except those issued by entities/companies resident in India (outside IFSC); and for payment of fees for education to foreign universities or foreign institutions in IFSCs for pursuing courses mentioned in the gazette notification no. SO 2374(E) dated May 23, 2022, issued by the Central Government.

“For these permissible purposes, resident individuals can open Foreign Currency Account (FCA) in IFSCs,” the RBI said.

“The directions contained in this circular have been issued under sections 10(4) and 11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999) and are without prejudice to permissions/approvals, if any, required under any other law,” the banking regulator said.

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.“

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