The Reserve Bank of India (RBI) seal is pictured on a gate outside the RBI headquarters in Mumbai.File
| Photo Credit: Reuters

The Reserve Bank of India (RBI) in a notification issued on Wednesday evening allowed resident individuals to open Foreign Currency Account (FCA) in International Financial Services Centres (IFSCs) at GIFT City in Gujarat under the Liberalised Remittance Scheme (LRS).

“On a review, it has been decided that Authorised Persons may facilitate remittances for all permissible purposes under LRS to IFSCs for availing financial services or financial products as per the International Financial Services Centres Authority Act, 2019 within IFSCs; and all current or capital account transactions, in any other foreign jurisdiction (other than IFSCs) through an FCA held in IFSCs,” the RBI said in the notification.

“Authorised Persons shall bring the contents of this circular to the notice of their constituents and customers,” it added.

Authorised persons are those authorised by the RBI to provide forex services such as banks and specific FX dealers as such transactions will be routed through the banking system.

Currently remittances under LRS to IFSCs are permitted only for making investments in IFSCs in securities except those issued by entities/companies resident in India (outside IFSC); and for payment of fees for education to foreign universities or foreign institutions in IFSCs for pursuing courses mentioned in the gazette notification no. SO 2374(E) dated May 23, 2022, issued by the Central Government.

“For these permissible purposes, resident individuals can open Foreign Currency Account (FCA) in IFSCs,” the RBI said.

“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,” the banking regulator said.

Tapan Ray, MD and Group CEO, GIFT City said “We at GIFT IFSC welcome the Reserve Bank of India’s recent circular expanding the scope of the Liberalised Remittance Scheme (LRS). This decisive move aligns GIFT IFSC with other global financial centers, allowing resident investors to leverage our platform for a wider range of overseas investments and expenditures. By clarifying the use of LRS for investments and enabling transactions like insurance and education loan payments in foreign currency, the RBI has significantly enhanced the attractiveness and utility of GIFT IFSC.“

BRS MLC K. Kavitha accused the BJP government at the Centre, alleging that there were no allocations for Telangana in the budget presented on Wednesday in the Parliament.

“Why the Centre has not been distributing funds equally to all States while propagating ‘Sab ka saath sab ka vikas?’ Was this budget meant for only a few States or the entire nation?” asked Ms. Kavitha while responding on the Union Budget. Pointing out to the tax exemption for Gift City in Gujarat till 2025, the MLC asked why similar extensions were not offered for National Investment and Manufacturing Zone (NIMZ) and Special Economic Zones (SEZ) in Telangana.

She said that there was no chance of any nursing colleges being announced for Telangana in the budget as they were linked to the medical colleges sanctioned by the Centre in the past, the MLC said that no funds were released for Kaleshwaram despite suggestion by NITI Aayog.

Referring to establishment of airports, the BRS leader wanted to know to which States these will be allotted. She opined that these airports would be sanctioned to BJP-ruled States and those going for elections.