Master Direction - Liberalised Remittance Scheme (LRS) (Updated as on September 06, 2024)
UR
- Applies toBanks that handle foreign money
- StatusIn force
- IssuedJan 04, 2016
- Amendmentsnone tracked
- Length42 points in 4 sections · 4 min read
The four dates on this rule
- PublishedJan 04, 2016The day RBI put this document out. This is the same day as the Issued date on this rule.
- Starts to applyNot statedNot stated separately in this document. Read the rule itself before you assume a start date.
- Time to get readyNot statedCannot be worked out until the day it starts to apply is known.
- Last date to actNot statedNo date to act by was found in this document. Other dates may sit inside single paragraphs.
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What it says
How firm is each point
Stated by RBI — RBI’s own paragraph says this. We have only made it plainer.
Our reading — BankPulse read RBI’s paragraph and shortened it. The paragraph is the authority, not this line.
Needs judgement — RBI leaves this to the bank to settle, so nobody can give you a fixed number here.
Must know
1. Who cannot use it
A company, a partnership firm, a Hindu undivided family and a trust are outside the scheme.
2. No pooling for capital items
Clubbing is barred for capital items unless the family members are co-owners.
3. Margin calls barred
Money may not be sent for margins or margin calls to an overseas exchange.
4. No buying an immigration seat
Money above that may not be used to earn immigration points through overseas investment.
5. No home deals through IFSC
An account in such a centre may not be used to settle deals with other residents.
6. Prohibited purposes barred
The scheme does not cover any purpose the current account rules prohibit outright.
7. High-risk countries barred
Capital account money may not go to countries the Financial Action Task Force names.
8. Terror-linked persons barred
Money may not reach persons or entities RBI has named as a terrorism risk.
9. Loan must be interest free
A loan to a non-resident relative must carry no interest and run at least one year.
BankPulse example. A resident lends money to a relative living abroad. The loan carries no interest at all. Its minimum maturity is one year, so it cannot be called back sooner.
10. Barred uses of the loan
The loan may not fund a chit fund, a Nidhi company, farming or a real estate business.
11. Loan may not go abroad
The loan money may not be remitted outside India.
Do it
1. One branch must be named
The individual must name one branch through which every remittance will be made.
2. Form A2 is required
The remitter must give Form A2 to buy foreign exchange under the scheme.
3. Dealer must be satisfied
The dealer must take a declaration showing the deal does not evade the foreign exchange law.
4. Records must be kept
The dealer must keep on record whatever it relied on, for the Reserve Bank to verify.
Background
1. When it began
The scheme started on 4 February 2004.
2. Why it exists
The scheme was made to let resident individuals send money abroad more freely.
3. Who the directions bind
RBI issues these directions to authorised persons under the Foreign Exchange Management Act.
4. What this book does
This book gathers RBI's instructions on money a resident individual may send abroad.
5. The yearly limit
A resident individual may send up to 250,000 US dollars in a financial year.
6. Minors are covered
Every resident individual may use the scheme, including a minor.
7. Family may pool
Family members may club their remittances if each of them meets the scheme's terms.
8. Bank account abroad
A resident may open a foreign currency account with a bank outside India.
9. Property abroad
Buying immovable property abroad is a permitted capital account use.
10. Loans to NRI relatives
A resident may lend, including in rupees, to a non-resident Indian who is a relative.
11. Above the limit needs RBI
Releasing more than the yearly limit needs the Reserve Bank's prior permission.
12. Nepal and Bhutan are outside
The private travel facility does not cover visits to Nepal and Bhutan.
13. Private travel
A private visit abroad may draw the full yearly limit, however many trips are made.
14. Tour costs count
Rail, road, water and overseas hotel costs all count inside the yearly limit.
15. Gift or donation
A resident may remit the yearly limit as a gift or as a donation outside India.
16. Going abroad for work
A person leaving for employment abroad may draw the yearly limit from an authorised dealer.
17. Keeping relatives abroad
A resident may remit the yearly limit towards the upkeep of relatives abroad.
18. Business trips
A conference, a seminar or specialised training abroad counts as a business visit.
19. Employer-paid trips sit outside
Where the employer bears the cost, the spending falls outside this scheme and has no limit.
20. Medical treatment abroad
Up to the yearly limit may be released for treatment abroad with no estimate demanded.
21. An attendant may travel
A further yearly limit is allowed for a person attending a patient travelling for treatment.
22. Objects of art
The scheme may be used to buy objects of art, subject to the trade policy in force.
23. Account abroad may be used
That foreign account may carry every transaction arising from a remittance under the scheme.
24. Money to an IFSC
Remittances to an International Financial Services Centre in India are allowed for permitted purposes.
25. PAN is compulsory
Giving a permanent account number is compulsory for every remittance under the scheme.
26. Loan sits inside the limit
That loan counts inside the same yearly limit as every other remittance.
27. Rupee gift to a relative
A resident may gift rupees to a non-resident relative by crossed cheque or transfer.