RBI removes restrictions on interest-earning FCA in India's IFSC

In an effort to make India's International Financial Services Centre (IFSC) more appealing, the Reserve Bank of India (RBI) has allowed individuals to open interest-earning Foreign Currency Accounts (FCA) without restriction.The central bank has also removed the requirement to repatriate funds remaining idle in the FCA account for up to 15 days. In February 2021, the RBI allowed resident individuals to make remittances under the Liberalised Remittance Scheme (LRS) to IFSCs set up in India, but the remittances were only allowed for making investments in IFSC securities, Business Outreach reported.Earlier, only non-interest-bearing FCAs were allowed in IFSCs under LRS, and any funds remaining idle in the account for up to 15 days from the date of its receipt were immediately transferred back to the domestic account of the investor in India. The RBI circular issued on Wednesday removes these key restrictions.The central bank, with an aim to deepen the financial markets in the IFSCs and to provide an opportunity for resident individuals to diversify their portfolios, permitted resident individuals to make remittances under the Liberalised Remittance Scheme (LRS) to International Financial Services Centres (IFSCs) established in India under the Liberalised Remittance Scheme (LRS) in February 2021.However, the payments were only to be used for investments in IFSC securities.The LRS empowered authorised dealers to facilitate remittances by resident individuals up to USD 250,000 per fiscal year for any transactions permitted by law.The central bank’s latest decision will also assist banks at IFSC in mobilising liabilities. The move will also allow individuals to hold their foreign currency for longer periods and earn interest on it.Read all the Latest News, Trending News, Cricket News, Bollywood News,India News and Entertainment News here. Follow us on Facebook, Twitter and Instagram.