On February 16 (Tuesday) RBI in a notification said AD Category – I banks may allow resident individuals to make remittances under LRS to IFSCs (International Financial Services Centres) in India, set up in India under the Special Economic Zone Act, 2005 subject to the following conditions:
- The remittance shall be made only for making investments in IFSCs in securities, other than those issued by entities/companies resident (outside IFSC) in India.
- Resident Individuals may also open a non-interest bearing Foreign Currency Account (FCA) in IFSCs, for making the above permissible investments under LRS. Any funds lying idle in the account for a period up to 15 days from the date of its receipt into the account shall be immediately repatriated to the domestic INR account of the investor in India.
- Resident Individuals shall not settle any domestic transactions with other residents through these FCAs held in IFSC.
RBI said that banks should ensure compliance with all other terms and conditions, including reporting requirements prescribed under the scheme while allowing remittances. The notification further said, “any person resident in India (outside IFSC) entering into any transaction with a person/entity in IFSC shall only be governed by regulations/directions and rules issued/notified by the Reserve Bank of India and the Government of India respectively under Foreign Exchange Management Act (FEMA), 1999”. The compounding of any contravention of FEMA provision by such person resident in India shall be dealt with by the Reserve Bank of India in accordance with the extant instructions/provisions on the compounding of contraventions under FEMA, it said.