FAQ - INVESTMENT IN FOREIGN SECURITIES FOR RESIDENT INDIVIDUALS

Q. Can remittances be made only in US Dollars?

Ans. The remittances can be made in any freely convertible foreign currency.

Q. Key things to note

Star Points

(*) Outward transfers from India using the Bank's Internet Banking services are only permissible through NRE accounts

(*) To reasonably satisfy that the transaction in foreign exchange (including remittance transactions) undertaken is not in contravention of the Foreign Exchange Management Act, 1999 (Act) or evades the provisions of the Act or any of the Rules or Regulations made or Notifications or directions or orders issued under the Act, the Authorised Dealer Bank may be required to obtain a declaration and such other information from the person (applicant) on whose behalf the transaction is being undertaken.  

(*) All fund transfer requests involving currencies apart from USD would be first converted to USD and then to the eventual currency intended in.

Other Points

(a) Under the LRS, currently the upper limit of remittance per individual is USD 2,50,000 per financial year. Family members of the resident individual can make the payment under LRS on an individual basis for any of the permitted reasons. Refer FAQs for details on consolidation of remittances

(b) You can send money abroad for reasons like your child's education, fund personal expenses like private visits, maintenance of close relatives, etc. or for buying a property overseas. Scroll down to know the list of permissible reasons

(c) You cannot remit funds abroad for prohibited purposes like buying lotteries or banned magazines, amongst others

(d) There is no restriction on frequency or number of transactions during a FY. However, total amount of foreign exchange remitted through, all sources in India under LRS during the current FY should be within LRS limit as specified by RBI

The LRS includes a comprehensive list of reasons for which you can remit funds.

Q. What are the requirements to be complied with by the remitter? Ans. The individual will have to designate a branch of an AD through which all the capital account remittances under the Scheme will be made. The applicants should have maintained the bank account with the bank for a minimum period of one year prior to the remittance. For remittances pertaining to permissible capital account transactions, if the applicant seeking to make the remittance is a new customer of the bank, Authorised Dealers should carry out due diligence on the opening, operation and maintenance of the account. Further, the AD should obtain bank statement for the previous year from the applicant to satisfy themselves regarding the source of funds. If such a bank statement is not available, copies of the latest Income Tax Assessment Order or Return filed by the applicant may be obtained. He has to furnish Form A-2 regarding the purpose of the remittance and declare that the funds belong to him and will not be used for purposes prohibited or regulated under the Scheme.

Q. Purposes for Remittance under LRS

Few of the reasons many residents use to send money overseas are listed below:

(a) Travel and tourism to foreign countries (except Nepal and Bhutan)

(b) Going abroad for employment

(c) Emigration

(d) Maintenance of close relatives living abroad

(e) Expenses in connection with medical treatment abroad

(f) Paying for education abroad

(g) Opening of a foreign currency account abroad with a bank

(h) Purchase of property abroad

(i) Making foreign investments in equity shares, debt instruments, mutual funds, venture capital funds, etc.

(j) Refer to the FAQs for the comprehensive list of purposes under which one can remit funds under LRS.

Q. REMITTANCE OF LRS THROUGH COMMERCIAL BANKS

You can remit under LRS in two ways: You can conveniently place a request for LRS transfer through Internet Banking or Global Money Transfer through the Bank's Mobile Banking app. You can currently remit USD 25,000 per day online for paying for overseas education, travel, medical purposes or for living expenses

You may visit your nearest Indian branch also to place a request for the above mentioned and other permitted purposes. The Banks Premier customers can reach out to their RM for any assistance.

Q. Para 5.4 of AP DIR Circular 106 dated June 01, 2015 states that the applicants should have maintained the bank account with the bank for a minimum period of one year prior to the remittance for capital account transactions. Whether this restriction applies to current account transactions? Ans. No. The rationale is that remittance facility is up to the LRS limit of USD 250, 000 for current account transactions under Schedule III of FEM (CAT) Amendment Rules, 2015, such as for private and business visits which can also be provided by FFMCs. As FFMCs cannot maintain accounts of remitters the proviso (as mentioned in para 5.4 of the circular ibid) has been confined to capital account transactions. However, FFMCs, are required to ensure that the "Know Your Customer" guidelines and the Anti-Money Laundering Rules in force have been complied with while allowing the current account transactions.

Q. Are there any restrictions on the frequency of the remittance? Ans. There are no restrictions on the frequency of remittances under LRS. However, the total amount of foreign exchange purchased from or remitted through, all sources in India during a financial year should be within the cumulative limit of USD 2,50,000. Once a remittance is made for an amount up to USD 2,50,000 during the financial year, a resident individual would not be eligible to make any further remittances under this scheme, even if the proceeds of the investments have been brought back into the country.

Q. Are there any restrictions on the kind/quality of debt or equity instruments an individual can invest in? Ans. No ratings or guidelines have been prescribed under LRS of USD 2,50,000 on the quality of the investment an individual can make. However, the individual investor is expected to exercise due diligence while taking a decision regarding the investments which he or she proposes to make.