What changed
Previously, any funds lying idle in a Foreign Currency Account (FCA) in an IFSC had to be repatriated within 15 days of receipt. This circular withdraws that condition with immediate effect, so idle funds no longer face a mandatory repatriation timeline. The change aligns IFSC LRS rules with those for other foreign jurisdictions.
What it means for you
Banks can now offer IFSC accounts under LRS without enforcing the 15-day repatriation clause, simplifying operations for customers. This reduces compliance burden for AD Category-I banks and makes IFSC accounts more attractive for resident individuals investing abroad. The Master Direction on LRS will be updated to reflect this relaxation.
What you must do
- Update internal LRS processing systems to remove the 15-day repatriation check for IFSC Foreign Currency Accounts.
- Communicate this change to all branches and relationship managers handling LRS remittances.
- Advise customers that idle funds in IFSC FCAs no longer require repatriation within 15 days.
- Monitor the updated Master Direction No. 7 for any further amendments and ensure compliance.
Who it affects
AD Category-I banks processing LRS remittances, Resident individuals investing through IFSCs under LRS, IFSC-based financial institutions and account providers
Does this circular apply to all LRS remittances or only those to IFSCs?
This circular specifically addresses remittances to International Financial Services Centres (IFSCs) under LRS. The 15-day repatriation condition has been withdrawn only for Foreign Currency Accounts opened in IFSCs.
What happens to funds that were already subject to the 15-day rule before this circular?
The circular does not specify retroactive application. Banks should treat all existing and new IFSC FCAs under the revised rules from April 26, 2023, and consult RBI if any clarification is needed on prior balances.
Do we need to update our LRS reporting systems for this change?
Yes, AD Category-I banks should update their internal systems to remove the 15-day repatriation trigger for IFSC accounts. Reporting under the Master Direction on LRS remains otherwise unchanged.