RBI Expands LRS Scope: Indian Residents Can Now Open Foreign Currency Accounts in GIFT City

The Reserve Bank of India has expand the scope of remittance options to International Financial Services Centres under the Liberalised Remittance Scheme enabling Indian residents to establish foreign currency accounts in GIFT City.

In a recent decision of RBI has empowered authorized entities to facilitate remittances for accessing financial services or products under the International Financial Services Centres Authority Act 2019 within IFSCs. This includes allowing all current or capital account transactions in any foreign jurisdiction through a Foreign Currency Account (FCA) held within IFSCs.

According to RBI’s announcement resident individuals are now permitted to open Foreign Currency Accounts (FCA) specifically within IFSCs for designated purposes. Presently, LRS remittances to IFSCs are authorized solely for investments in IFSC securities, excluding those issued by entities outside IFSCs but within India, and for paying educational fees to foreign universities or institutions located within IFSCs offering specific courses.

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This regulatory update facilitates resident Indians to deposit foreign currencies such as dollars in fixed deposits within GIFT City banks. Tapan Ray, MD and Group CEO of GIFT City, highlighted the significance of this development, emphasizing that it aligns GIFT IFSC with global financial hubs.

This enhancement clarifies LRS utilization for investments and facilitates transactions like insurance and educational loan payments in foreign currencies, thereby augmenting the appeal and practicality of GIFT IFSC.