Archive · 12 Jun 2025
RBI Tightens Rules on Remittances to Curb Foreign Currency Deposits
The Reserve Bank of India (RBI) is changing the rules for sending money abroad.
They want to stop people from using this money to put into foreign bank accounts that earn interest.
The RBI is concerned people are using the scheme to move money out of the country in a way that could be risky.
The changes are also about making sure the money sent out is used for things like education or travel, not just for storing money.
The new rules will not impact existing permitted foreign investments like stocks or property.
RBI plans to tighten rules on overseas remittances to prevent holding foreign currency deposits with lock-in periods.
The move aims to stop using remittances for passive wealth shifting, safeguarding foreign exchange reserves.
Regulations will be amended to prevent such deposits, even under alternate names.
Outward remittances increased, especially with easier global investing options through fintech platforms.
The revised rules won't affect foreign investments in equities, mutual funds, or property under the LRS.
- Who
- Reserve Bank of India (RBI).
- What
- RBI is amending the Liberalised Remittance Scheme to prevent using overseas remittances for foreign currency deposits with lock-in periods.
- When
- The changes are being implemented in response to rising outward remittances, with an increase noticed in March 2025.
- Where
- India.
- Why
- To safeguard foreign exchange reserves, manage currency volatility and prevent the misuse of the LRS for passive capital export.
Concerns Addressed
Investment Restrictions
Capital Control
Concerns Addressed
Prevents the scheme from being used for wealth shifting.
Investment Restrictions
Restricts investment choices.
- Remittance Scheme
- Liberalised Remittance Scheme (LRS)
- Annual Remittance Limit
- $250,000 per individual
- Outward Remittances FY24/25
- Nearly $30 billion
- Increase in March 2025
- $173.2 million
- Previous Month's Remittances
- $51.62 million in February
- Policy Aim
- Preventing misuse and ensuring funds are used for genuine needs
