The Reserve Bank of India (RBI) has introduced new regulations allowing Indian residents to maintain Foreign Currency Accounts (FCA) within Indian jurisdiction, facilitating global investments and funding for foreign education.
Previously, Indian residents planning to invest abroad were required to open bank accounts in foreign jurisdictions before accessing global equity markets. Similarly, parents financing their children’s foreign education had to initiate the process of opening a foreign bank account.
Under the new rules, the RBI allows Indian residents to maintain FCAs within Indian jurisdiction, providing greater flexibility for permitted foreign exchange transactions. The RBI has expanded the scope of remittances to International Financial Services Centres (IFSCs) under the Liberalised Remittance Scheme (LRS).
Residents can now open forex accounts in the Gujarat International Finance Tec-City (GIFT City) and remit funds for all purposes permitted under the LRS. The RBI permits any current or capital account transactions and remittances for all permissible reasons under LRS in any foreign jurisdiction via an FCA held in IFSCs. However, resident individuals cannot settle domestic transactions with other residents using FCAs maintained in the IFSC.