RBI Allows Foreign Currency Accounts in GIFT City IFSCs Under Expanded LRS
Mumbai, 11th July 2024: The Reserve Bank of India (RBI) has broadened the scope of remittances to International Financial Services Centres (IFSCs) under the Liberalised Remittance Scheme (LRS), allowing Indian residents to open foreign currency accounts in Gujarat International Finance Tec-City (GIFT City).
In a recent decision, the RBI authorized remittances through licensed entities for accessing financial services or products as per the International Financial Services Centres Authority Act, 2019 within IFSCs. The central bank also permitted all current or capital account transactions in any foreign jurisdiction (excluding IFSCs) through a Foreign Currency Account (FCA) held in IFSCs.
According to RBI, resident individuals can now open a Foreign Currency Account (FCA) in IFSCs for permissible purposes. Previously, LRS remittances to IFSCs were restricted to investments in IFSC securities and payments of educational fees for specific courses in foreign universities or institutions within IFSCs.
This policy update allows resident Indians to deposit fixed amounts in foreign currencies such as dollars in GIFT City bank accounts, enhancing flexibility in managing foreign exchange transactions and enabling seamless remittances.
“This strategic decision aligns GIFT IFSC with other global financial centres, empowering resident investors to utilize our platform for broader overseas investments and expenditures. By clarifying LRS usage for investments and enabling transactions like insurance and education loan payments in foreign currencies, RBI has significantly augmented the appeal and functionality of GIFT IFSC,” remarked Tapan Ray, MD and Group CEO of GIFT City.
Narinder Wadhwa, Managing Director of SKI Capital Services, opined that the RBI’s move will fortify GIFT City’s reputation as a premier international financial hub, attracting increased participation from global financial entities and stimulating overall economic activity in the region.
