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RBI Allows The Opening of Foreign Currency Accounts in GIFT City

11 July 20243 mins read by Angel One
Indian residents can now leverage GIFT City's enhanced capabilities under RBI's Liberalised Remittance Scheme for a wide range of international financial transactions.
RBI Allows The Opening of Foreign Currency Accounts in GIFT  City
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In a move aimed at bolstering international financial transactions for Indian residents, the Reserve Bank of India (RBI) has recently expanded the scope of its Liberalised Remittance Scheme (LRS) to include transactions through India’s premier International Financial Services Centre (IFSC) – GIFT City. Under the revised guidelines, individuals can now remit up to $250,000 abroad annually, significantly broadening the permissible uses of LRS funds beyond the previous limitations on investments in IFSC securities and education expenses within IFSCs.

Expansion of RBI’s Liberalised Remittance Scheme

Previously, transfers under the LRS to IFSCs were primarily restricted to investments in securities within IFSCs, excluding Indian companies, and paying education fees to foreign institutions operating within IFSCs. This restricted scope posed challenges for residents looking to diversify their investments or manage international expenditures effectively. However, with the recent regulatory changes, residents can now utilize LRS funds for a wide array of purposes, including deposits, purchasing immovable property abroad, investing in equity and debt instruments overseas, gifting, donations, travel expenses, medical treatment abroad, and funding education at foreign universities outside IFSCs.

Financial Empowerment Through GIFT City

GIFT City, located in Gandhinagar Gujarat, stands as  India’s designated International Financial Services Centre (IFSC), stands out as the sole government-approved hub for global financial transactions. With RBI’s latest clarification, residents can utilize LRS funds within GIFT City for portfolio management schemes investing in foreign securities and depository receipts of foreign stocks listed on IFSC exchanges. Restrictions remain for investments in Indian company stocks within IFSC, but opportunities flourish for foreign listings.

Conclusion: The recent amendments to RBI’s LRS mark a significant step forward for GIFT City, positioning it as a key player in facilitating global financial transactions for Indian residents. This regulatory change not only expands investment horizons but also underscores India’s commitment to integrating with global financial markets.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions

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