What changed
RBI issued clarifications on LRS queries, confirming that acquisition of both listed and unlisted shares of overseas companies is permitted under LRS. It also clarified that remittances for education (up to the institution's estimate or USD 100,000, whichever is higher) and medical expenses (up to the doctor's estimate for treatment, plus up to USD 25,000 for maintenance/attendant) are over and above the LRS limit, not subsumed within it.
What it means for you
Banks can now confidently process LRS remittances for overseas share purchases without distinguishing between listed and unlisted securities. For education and medical remittances, lenders must apply separate limits, ensuring genuine transactions are not constrained by the LRS cap. This reduces compliance ambiguity and supports customer needs.
What you must do
- Update internal LRS processing guidelines to allow remittances for both listed and unlisted overseas shares.
- Ensure staff distinguish between LRS limit (USD 75,000) and separate limits for education (up to institution estimate or USD 100,000, whichever is higher) and medical expenses (up to doctor's estimate for treatment, plus up to USD 25,000 for maintenance/attendant).
- Verify bonafides of transactions for other permissible current account remittances beyond LRS, as per ADMA Circular No.11 dated May 16, 2000.
- Communicate these clarifications to customers to avoid confusion and ensure compliance.
Who it affects
Authorised Dealer Category-I banks, Resident individuals using LRS, Customers making education or medical remittances abroad
Can I use LRS to buy shares of an overseas company that are not listed on a stock exchange?
Yes, RBI clarifies that LRS can be used to acquire both listed and unlisted shares of an overseas company, as per the modified Master Circular.
If I send money for my child's education abroad, does that count against my USD 75,000 LRS limit?
No, education remittances are separate. You can send up to the institution's estimate or USD 100,000, whichever is higher, over and above the LRS limit.
What about medical treatment expenses abroad—are they also outside the LRS limit?
Yes, medical remittances up to the doctor's estimate for treatment, plus up to USD 25,000 for maintenance or attendant expenses, are allowed without RBI approval and are not counted under the LRS limit.