Gandhinagar: The Reserve Bank of India has issued a circular today regarding the Remittances to International Financial Services Centres (IFSCs) under the Liberalised Remittance Scheme (LRS)

Welcoming this, Tapan Ray, Managing Director and Group Chief Executive Officer of 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. We thank the RBI for this progressive step, which will bolster GIFT IFSC’s role as a leading international financial services hub.”

RBI in its circular said:

At present, remittances under LRS to IFSCs can be made only for:
i. Making investments in IFSCs in securities except those issued by entities/companies resident in India (outside IFSC); and
ii. 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.

3. On a review, it has been decided that Authorised Persons may facilitate remittances for all permissible purposes under LRS to IFSCs for:
i. Availing financial services or financial products as per the International Financial Services Centres Authority Act, 2019 within IFSCs; and
ii. All current or capital account transactions, in any other foreign jurisdiction (other than IFSCs) through an FCA held in IFSCs. For these permissible purposes, resident individuals can open Foreign Currency Account (FCA) in IFSCs.

4. Authorised Persons shall bring the contents of this circular to the notice of their constituents and customers. The Master Direction No.7/2015-16 on LRS is being updated to reflect these changes.

5. 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. DeshGujarat