Under the Liberalized Remittance Scheme (LRS), the Reserve Bank of India (RBI) has broadened the scope of remittances to International Financial Services Centres (IFSCs), enabling Indian citizens to open foreign currency accounts in GIFT City.
The International Financial Services Centers Authority Act, 2019 within IFSCs permits authorised individuals to facilitate transfers for the purpose of obtaining financial services or goods. This decision was made by the RBI on Wednesday.
Additionally, all capital or current account transactions through a Foreign Currency Account (FCA) kept in an IFSC were allowed by the apex bank in any other foreign jurisdiction (apart from IFSCs).
According to an announcement by the RBI, residents may create a Foreign Currency Account (FCA) in an IFSC for certain approved uses.
As of right now, remittances under LRS to IFSCs can only be used for two purposes: either to invest in securities issued by IFSCs (apart from those issued by Indian entities or companies) or to pay educational fees to foreign universities or foreign institutions registered as IFSCs for specific courses.
Indian residents will now be able to open a fixed deposit in foreign currency, such as dollars, in a GIFT City bank account thanks to the central bank’s most recent action.
With this bold action, GIFT IFSC is now in line with other international financial hubs, enabling domestic investors to use our platform for a greater range of foreign investments and expenses. The RBI has greatly increased the appeal and usefulness of GIFT IFSC, according to Tapan Ray, MD and Group CEO of GIFT City. This is because it has made it clearer how LRS can be used for investments and made it possible for transactions like paying for insurance and school loans in foreign currencies.
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