Mumbai: As part of efforts to flush out excess foreign capital, Reserve Bank has allowed resident Indians to open accounts in banks outside the country and transfer up to $100,000 (Rs 41 lakh) a year in them without its approval.
Individuals can now open, maintain and hold foreign currency accounts with banks outside India, the Reserve Bank said, while clarifying the provisions of the Liberalizsed Remittance Scheme (LRS).
The RBI clarification comes on the heels of the union government tightening External Commercial Borrowings (ECBs) to restrict inflow of foreign capital to prevent appreciation of the Indian currency.
RBI and the Centre have been encouraging people and corporates to invest overseas to tide over the problems created by excessive inflow of foreign capital.
The RBI said under LRS, resident individuals can remit up to $100,000 in a financial year to acquire and hold immovable property, make investment in financial instruments or purchase any other asset without any prior approval.
Resident individuals, RBI clarified, could utilise the amount deposited in foreign bank accounts to invest in mutual funds, venture funds, unrated debt securities and promissory notes under the scheme.
Under the LRS, which was originally announced in 2004 to simplify and liberalize foreign exchange facility available to resident individuals, an individual will have to quote his or her Permanent Account Number (PAN) to avail the benefit of the scheme, it said.