Resident Individuals Allowed to Keep Funds in FC Account in IFSCs without Repatriation: RBI

RBI/2023-24/21 A.P. (DIR Series) Circular No.03, Dated 26.04.2023

Earlier, on February 16, 2021, the RBI issued a circular on “Remittances to International Financial Services Centres (IFSCs) in India under the Liberalised Remittance Scheme (LRS)”. This circular allowed resident individuals to make remittances under LRS to IFSCs in India, subject to certain conditions.

The conditions were as follows –

(a) The remittance shall be made only for making investments in IFSCs in securities, other than those issued by entities/companies resident outside IFSCs in India

(b) Resident Individuals may open a non-interest bearing Foreign Currency Account (FCA) in IFSCs for making permissible investments under LRS. Any funds lying idle in the account for up to 15 days from the date of receipt shall be immediately repatriated to the investor’s domestic INR account in India.

(c) Resident Individuals shall not settle any domestic transactions with other residents through these FCAs held in IFSC.

On a review and with the objective to align LRS for IFSCs set up under the IFSCA Act, the RBI has now decided to amend the circular. Accordingly, the RBI has withdrawn the condition of repatriating any funds lying idle in the account for a period of up to 15 days from the date of its receipt with immediate effect. Further, the same shall be governed by the provisions of the scheme as contained in the Master Direction on LRS.

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