LRS Remittances to IFSCs Now Permitted for Resident Individuals
No longer current — withdrawn, no replacement on file yet
RBI's own words: “the condition of repatriating any funds lying idle in the account for a period up to 15 days from the date of its receipt is withdrawn” — RBI/2023-24/21
Source: Reserve Bank of India · RBI/2020-21/99 · issued 16 Feb 2021 · ~2 min read
Quick answerRBI now allows resident individuals to remit funds under LRS to IFSCs in India for investment in securities (excluding those issued by resident entities outside IFSC) and to open non-interest bearing foreign currency accounts there, with idle funds repatriated within 15 days.
The rule, in the simplest words
Resident individuals (people living in India) can now send money under LRS (a scheme to send money abroad) to IFSCs (special finance zones inside India) to buy securities (like shares or bonds) there.
They cannot buy securities issued by companies that are based outside the IFSC (i.e., regular Indian companies).
They can open a foreign currency account (an account in dollars or other foreign money) in an IFSC, but it must not pay interest.
Any money sitting idle in that account for more than 15 days must be sent back to the person's regular Indian rupee account.
Residents cannot use these IFSC accounts to do domestic transactions (buy/sell things) with other residents inside India.
How it plays out — a real example
A forex & trade-finance officer in Mumbai helps a customer, Priya, who wants to invest in stocks listed in an IFSC. The officer sets up a foreign currency account for her in the IFSC and reminds her that if she doesn't use the money within 15 days, it must be returned to her Indian rupee account. He also checks that the stocks she buys are not from a regular Indian company outside the IFSC.
What changed
Previously, LRS remittances to IFSCs were not explicitly permitted. Now, resident individuals can remit under LRS to IFSCs for investments in securities (excluding those issued by entities resident outside IFSC) and can open non-interest bearing foreign currency accounts. Idle funds in such accounts must be repatriated to the investor's domestic INR account within 15 days.
What it means for you
Banks must update their LRS processes to allow remittances to IFSCs for eligible investments, ensuring compliance with FEMA rules. This deepens IFSC financial markets and offers residents portfolio diversification, but banks must enforce the 15-day repatriation rule and prohibit domestic transactions between residents via these accounts.
Historical instruction — do not use for current compliance. This is what was required at the time; it no longer reflects current RBI requirements. If no replacement rule is linked above, that only means none is recorded on our register yet — it does not prove no later applicable rule exists. Confirm on the official RBI source below.
What banks were required to do at the time
Update internal LRS guidelines to permit remittances to IFSCs for investments in securities (excluding those issued by entities resident outside IFSC).
Enable resident individuals to open non-interest bearing foreign currency accounts in IFSCs under LRS, with a 15-day repatriation rule for idle funds.
Ensure no domestic transactions between residents are settled through these IFSC foreign currency accounts.
Comply with all reporting requirements under the LRS Master Direction and bring circular contents to customers' notice.
Who it affects
Category-I Authorised Dealer Banks, Resident individuals seeking to invest in IFSCs, IFSC entities and financial market participants
Built from our lineage records — each fact carries its provenance; missing history simply is not shown (never guessed).
Can resident individuals invest in any security in IFSCs under this LRS facility?
No, investments are permitted only in securities issued by entities resident in IFSCs, not those issued by entities/companies resident outside IFSC in India.
What happens if funds in the IFSC foreign currency account remain idle beyond 15 days?
Any idle funds must be immediately repatriated to the investor's domestic INR account in India within 15 days from receipt.
Are AD Category-I banks required to update any existing master directions?
Yes, the Master Direction on LRS is being updated to reflect these changes, and banks must ensure compliance with all terms and reporting requirements.
📜 This document’s life story (2 recorded events, each backed by RBI’s own words)
RBI’s words: “the condition of repatriating any funds lying idle in the account for a period up to 15 days from the date of its receipt is withdrawn”
📜 Read the original circular — full text as issued by RBI
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
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2020-21/99 · issued 16 Feb 2021. The plain-English explanation above is BankPulse’s own independent summary.
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BankPulse Compliance Evidence Pack — generated 03 Aug 2026 · status cross-checked against RBI’s official withdrawal register (refreshed weekly). Official RBI source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=12029&Mode=0 — Plain-English summary by BankPulse (bankpulse.ai), reviewed by our expert reviewer, CA Amit Jain. Independent platform, not affiliated with the Reserve Bank of India; is our own plain-English paraphrase, not RBI’s original wording.
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