Business new tamfitronics
MUMBAI: Indian residents can now open
foreign currency
accounts in
GIFT City
into which they can remit money for all purposes allowed under
RBI
‘s Liberalised Remittance Scheme. The scheme allows every individual to send up to $250,000 abroad annually.
So far, money transfers under
LRS
to International Financial Services Centres (IFSCs) were allowed only for investing in securities within
IFSCs
excluding Indian companies, and for paying education fees to foreign universities or institutions in IFSCs.
Now, RBI allows remittances under LRS for deposits, purchasing immovable property, investing in equity and debt, giving gifts, making donations, travelling, maintaining close relatives, receiving medical treatment as well as studying abroad. The foreign currency account in GIFT City can be used for all these purposes.
The funds in the foreign currency accounts can be used to invest in portfolio management schemes that invest in foreign securities and also in depository receipts of foreign stocks trading in IFSC exchange. Residents, however, are not allowed to invest in stocks of Indian companies listed on IFSC but can invest in foreign listings. An IFSC is a jurisdiction where business is done in foreign currency and for all regulatory purposes, treated as an international financial hub. In India, GIFT City is the only IFSC to have been approved by govt.
“RBI has finally clarified and confirmed that residents can use LRS for all types of investments and expenditures. This puts GIFT IFSC on the same level as other jurisdictions for LRS investments. Previously, it was unclear whether LRS funds could be used through GIFT for overseas investments. Additionally, expenditures were not allowed, making it impossible to buy insurance policies or paying education loans in dollars,” said a senior banker. This is the latest liberalisation for GIFT City, and follows a series of steps taken over the last 10 years.
