What changed
Previously, LRS remittances to IFSCs were restricted to investments in securities. This circular adds a new purpose: payment of fees for courses at foreign universities or institutions located in IFSCs, as per the government's gazette notification.
What it means for you
Banks can now process LRS remittances to IFSCs for education fees, opening a new channel for students. This aligns IFSCs with broader LRS objectives and may increase transaction volumes for authorised persons. Lenders must update their compliance systems to include this new purpose code.
What you must do
- Update internal LRS processing systems to include 'studies abroad' as a valid purpose for IFSC remittances.
- Train staff on verifying that courses meet the criteria in the government's gazette notification.
- Inform customers about this new facility through circulars or branch communications.
- Ensure all remittances comply with FEMA sections 10(4) and 11(1) and other applicable laws.
Who it affects
Authorised Persons (banks and ADs), Resident individuals seeking to study at foreign institutions in IFSCs, IFSC-based foreign universities and institutions
Can I now use LRS to pay tuition fees to a foreign university located in an IFSC?
Yes, RBI has allowed remittances under LRS for 'studies abroad' to pay fees to foreign universities or institutions in IFSCs, provided the courses are covered by the government's gazette notification.
What was the earlier restriction on LRS remittances to IFSCs?
Earlier, LRS remittances to IFSCs were only permitted for making investments in securities. This circular expands the scope to include education-related payments.