| Date: |
16-02-2021
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| Notification No: |
A.P. (DIR Series) Circular No. 11
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| Issuing Authority: |
RBI
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| Type: |
A.P.D.(Series) Circulars
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| File No: |
RBI/2020-21/99 |
| Subject: |
Remittances to International Financial Services Centres (IFSCs) in India under the Liberalised Remittance Scheme (LRS)
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RBI/2020-21/99
A.P. (DIR Series) Circular No. 11
February 16, 2021
To
All Category-I Authorised Dealer Banks
Madam / Sir
Remittances to International Financial
Services Centres (IFSCs) in India under the
Liberalised Remittance Scheme
(LRS)
Please refer to the Statement on Development and
Regulatory Polices announced as part of the Bi-monthly Monetary Policy Statement
dated February 05, 2021 on the above subject.
2. With a view to deepen
the financial markets in International Financial Services Centres (IFSCs) and
provide an opportunity to resident individuals to diversify their portfolio, the
extant guidelines on Liberalised Remittance Scheme (LRS) have been reviewed and
it has been decided to permit resident individuals to make remittances under LRS
to IFSCs set up in India under the Special Economic Zone Act, 2005, as amended
from time to time. Accordingly, AD Category - I banks may allow resident
individuals to make remittances under LRS to IFSCs in India, subject to the
following conditions:
The remittance shall be made only for making
investments in IFSCs in securities, other than those issued by
entities/companies resident (outside IFSC) in India.
Resident Individuals
may also open a non interest bearing Foreign Currency Account (FCA) in IFSCs,
for making the above permissible investments under LRS. Any funds lying idle in
the account for a period upto 15 days from the date of its receipt into the
account shall be immediately repatriated to domestic INR account of the investor
in India.
Resident Individuals shall not settle any domestic transactions
with other residents through these FCAs held in IFSC.
3. AD Category - I
banks, while allowing such remittances, shall ensure compliance with all other
terms and conditions, including reporting requirements prescribed under the
Scheme. It may be noted that any person resident in India (outside IFSC)
entering into any transaction with a person/entity in IFSC shall only be
governed by regulations/directions and rules issued/notified by the Reserve Bank
of India and the Government of India respectively under Foreign Exchange
Management Act (FEMA), 1999. Further, compounding of any contravention of FEMA
provision by such person resident in India shall be dealt by the Reserve Bank of
India in accordance with the extant instructions/provisions on compounding of
contraventions under FEMA.
4. Master Direction No.7 (Master Direction –
Liberalised Remittance Scheme) is being updated to reflect the above changes. AD
Category - I banks should bring the contents of this circular to the notice of
their constituents and customers.
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.
Yours faithfully
Ajay Kumar Misra
Chief
General Manager-in-Charge
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