Overseas remittance limit raised to $125,000
Jun 03 2014 , Mumbai
Indians could remit up to $2 lakh under the liberalised remittance scheme before it was reduced to $75,000 in 2013 to arrest the rupee depreciation.
In its second bimonthly monetary policy on Tuesday, the central bank hiked the overseas remittances limit without any end-use restriction, except for the usual curb on prohibited foreign exchange transactions such as margin trading and lottery.
Indians are allowed to take Indian currency of up to Rs 10,000 while leaving the country. Non-resident Indians visiting the country are not permitted to take out any Indian currency while leaving.
“To facilitate travel requirements of non-resident Indians visiting the country, it has been decided to allow all residents and non-residents — except citizens of Pakistan and Bangladesh — to take out Indian currency notes up to Rs 25,000 while leaving. Operating guidelines in this regard will be issued separately,” RBI said in the money policy statement.
Chanda Kochhar, managing director and chief executive officer of ICICI Bank, said the measures reflected a significantly improved confidence in the country’s external position.
“This is what has allowed reversal of the extraordinary measures taken last year, as well as the focus on developing deeper onshore markets,” she said.
RBI said as much. The relaxations on the foreign exchange front had been announced in the view of the recent stability on the country’s forex reserves, the central bank said.
“Raising the ceiling on foreign currency remittances implies better macroeconomic indicator,” said Shailendra Bhandari, managing director and chief executive officer of ING Vysya Bank.
RBI also allowed foreign portfolio investors to participate in the domestic exchange-traded currency derivatives market with an additional $10 million limit to improve depth and liquidity in the foreign exchange market. Domestic entities will also have similar access to the exchange-traded currency derivatives market. Detailed operating guidelines will be issued separately, RBI said.
“This will provide a cover for the companies that take to this market to hedge risk. Further, forex outflows have been liberalised given the stability in exchange rate and sufficient forex reserves in the country,” said an economist.
George Alexander Muthoot, managing director of Muthoot Finance, welcomed the move to increase the overseas remittance limit from $75,000 to $125,000. “This will facilitate Indians with improved liquidity to acquire and hold shares, debt instruments or other assets outside India without prior approval from RBI.”